Preamble

The House met at Ten o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

AGRICULTURE (FOOT-AND-MOUTH DISEASE)

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart): With your permission, Mr. Speaker, and that of the House, I wish to make a statement on procedures for dealing with foot-and-mouth disease. My Department has had discussions with the National Farmers' Unions about the recommendations which they have put to me based on a report by their Northumberland and Roxburghshire county branches. I can and will gladly accept many of these recommendations. I am placing in the Library a document setting out the recommendations in full, together with my detailed comments.
Many of the recommendations relate to the arrangements for publicity and advice to the farming community and others when an outbreak occurs. This includes provision for warning notices on roads, posters for footpaths and farms, leaflets for the police, farmers and others in an infected area, and advice on movements of machinery and vehicles. Many of these recommendations are part of our ordinary practice, but I am grateful to the unions for the useful ideas which they have put forward in the light of the exceptional difficulties met with in Northumberland, and I shall make the utmost practicable use of them.
A number of recommendations are concerned with veterinary matters such as diagnosis and prevention of spread of disease. Here, as the unions would be the first to recognise, professional judgment must prevail. It is none the less important that farmer and veterinarian should understand each other's point of view, and in my comments I have dealt fully with the points raised.
Other recommendations deal with the organisation and technique of slaughter and disposal. After taking the advice of

animal welfare organisations and of a distinguished physiologist, I have concluded that the best course is to continue to use the captive bolt pistol and to follow it up by using the pithing cane. The reasons for this are set out fully in my comments. I entirely accept the importance of appointing a foreman to be in charge of operations at each infected place under the instruction of the veterinary officer, and I shall continue to follow this practice in the future.
Finally, the unions have made suggestions for mitigating losses resulting from outbreaks. The most practicable means of doing this is to make the best use of available slaughtering facilities. We always give full weight to this in defining boundaries of an infected area, but it cannot be the only consideration. My officials will consult with the unions on any proposed contraction of an area in case this may lead to slaughtering difficulties. I am awaiting further comments from the unions on ways and means of alleviating the difficulties of holders of clean stock.
I am indebted to the unions for their careful study of these matters. The success of my veterinary service in eliminating foot-and-mouth disease, whenever and wherever it unfortunately occurs, depends on the co-operation and understanding of the agricultural community. This has always been given in full measure, and I hope that the discussions which have taken place will lead to further improvements in our arrangements.

Mr. Godber: I am sure that we on this side are glad that the Minister has made this careful assessment of the document submitted by the National Farmers' Union. We will wish to study his own document which will be in the Library and must, therefore, reserve detailed comments. The right hon. Gentleman put his recommendations into three categories. On the first, publicity, it is right to do the utmost. I know that the right hon. Gentleman realises as well as I do the difficulties in the second, the veterinary aspect, and the special problems of veterinary surgeons. I am glad to note what he said in this regard.
The third category is the one which has aroused most public concern, that is, slaughter. I note what the right hon. Gentleman has said about the captive bolt


pistol, and we will want to consider this again. I am sure that we all appreciate that what is required is the most painless way of disposing of these animals, which has to be done with great speed and often under great difficulties. We will, therefore, study the outcome of this. Unfortunate feelings were aroused over this outbreak, but if it leads to a means of ensuring better understanding of the problems and a better way of disposing of the animals, it will have done good.

Mr. Peart: I am grateful to the right hon. Gentleman for his remarks. He rightly stresses that there are three important aspects of the report. There is publicity, which involves information and education, there is the veterinary aspect, and there are the slaughtering techniques. Here I wish to put on record my tribute to the R.S.P.C.A., to the Council of Justice to Animals and to the Humane Slaughter Association and to the distinguished physiologist, Dr. Bell, all of whom have given me advice on the subject.

Viscount Lambton: I, too, would like to reserve my judgment until I have studied the paper in the Library. The most conspicuous thing that the Minister has said this morning—

Mr. Speaker: Order. The hon. Member must ask only elucidatory questions at this stage.

Viscount Lambton: The right hon. Gentleman refers to the use of the captive-bolt pistol which is to be followed by the cane poked into the brain. Am I right in thinking that that was the cause of many animals not being killed immediately last time?

Mr. Peart: I appreciate that hon. Members must reserve their position at present as they naturally wish to read the report. As for the use of a captive-bolt pistol and the whole question of slaughter techniques, I took advice and I accept the recommendations of those bodies that the existing captive-bolt pistol must continue to be used for the time being as there is really no better weapon available to slaughtermen. The use of the pithing cane has been commented on by myself, and it is referred to in the report. In the circumstances it was right that I should accept what was put to me.

Mr. David Steel: Is the Minister aware that his reference in the statement to the importance of warning posters will be greatly welcomed by farmers in my constituency who, as he knows, were critical of the previous posters. May I ask him whether the reference in the statement to
… alleviating the difficulties of holders of clean stock
means that the Minister is fully seized of the hardship caused to holders of clean stock in the recent outbreak?

Mr. Peart: Yes, Sir. That is what I said, and I thought that I should emphasise it. We are to have further consultations with experts about the siting and layout of warning notices—for example, the warning notices on roads. I have dealt specifically with warning notices for foot-paths and farms, which are spelt out in greater detail, and I am sure that they will be welcomed by the hon. Gentleman.

Mr. Jopling: Will the Minister say where he intends to recruit the foremen who will be in charge of slaughtering? What will be their qualifications? To what extent can the Minister guarantee that the actual slaughtering will be done only by licensed slaughtermen?

Mr. Peart: Recruiting is a difficult problem. I have dealt with slaughtering and disposal. There is the question of whether we can have assistance from other organisations in time of emergency. Obviously we have to rely on existing procedures. I am considering whether it would be practicable for a military task force, for example, to give assistance. I am still discussing what help the military service can give. On the other hand, foremen should always be appointed in charge of operations—this is very vital, in relation to slaughtermen—and they would be under the instructions of the veterinary officer. I think that this is the main difficulty.

Mr. Peter Mills: Would not the right hon. Gentleman agree that, looking at the problem, perhaps one of the reasons why in the past there have been these serious problems, and sometimes near-panic, has been the speed of the operation of slaughtering? Surely it is much better to carry out the job systematically and slowly, with the whole area sealed off, rather than try to kill off these flocks and herds very quickly.

Mr. Peart: The difficulty is that we have to act quickly. I am therefore very grateful for suggestions on how to improve the organisation. This is what the unions have done. Obviously, a large amount of unskilled labour will have to be used in any case. The question is whether we have the right organisation and whether it can act quickly—because speed is the essence of the operation.

Mr. Godber: The right hon. Gentleman might elucidate rather more his reference to a military task force. This has rather surprised me. Is he thinking of military veterinarians, or assistance towards slaughtering? What has he in mind?

Mr. Peart: It has been put to me that we might, for example, use the civil defence people, and also military personnel in certain circumstances. I have quite an open mind on the subject. We are looking at it and I am having consultations.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order.

TELEVISION ACT, 1964

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Armstrong.]

10.16 a.m.

Dr. M. P. Winstanley: I would, perhaps, be best serving the interests of the House, Mr. Speaker, by coming straight to the point, rather than dwelling on the historic nature of an occasion on which the Liberal Party has had the privilege of selecting the business of the House. It may be that my right hon. Friend the Leader of the Liberal party will refer to that aspect if he is fortunate enough to catch your eye. By that time, I hope that it will have become apparent that this occasion has been valuable not only to the Liberal Party but to the House as a whole.
It is with that point in mind that we have selected for debate the Television Act, 1964, and its consequences. No one can deny the importance of the subject. In so far as it affects the quantity and quality, the general character and range of choice of television programmes it affects us all. It has some personal implications for all those whose livelihoods depend in one way or another on television—those who work in it, those who invest in it. It has equally serious implications for those who are concerned with the way in which news and information is disseminated. Perhaps it has the most serious implications of all for those concerned about the manner in which power is wielded in a Parliamentary democracy.
There can be no doubt about the power. The power to award or take away fortunes, to bestow or to remove influence, to say who shall or who shall not operate in this sphere, is of very much more than mere passing interest. Let us be clear that in operating this power and taking the steps it has taken the Independent Television Authority is doing no more than discharging the duty laid on it by this House.
Let us also be clear that in carrying out these very heavy responsibilities the Authority is not accountable for its actions in what we have come to regard as the ordinary sense. We are getting a little too used, in my opinion, to power being exercised by non-elected bodies, but


where it is so exercised the House has a special responsibility to see that the public interest is being served. The Guardian has already made some pungent comments on I.T.A.'s accountability to this House, but we can do something to neutralise the effect of our lack of direct authority.
I would first ask the House to consider whether the special position of the I.T.A. does not indicate that its proceedings should be open, as far as is conveniently possible, to public scrutiny. Let us take the kind of criteria on which the Authority exercises its powers and makes its decisions. I believe that these criteria ought now to be published much more widely than has hitherto been the case. It seems to me to be very difficult to expect a company to conform to the wishes of the Authority unless those wishes are clearly known.
I believe, too, that it is important that the Authority's wishes should be made clear in a public sense so that the public itself can decide whether or not it approves of the sort of criteria upon which the Authority bases its decisions. The public might also wish from time to time to comment on the extent to which existing companies are conforming with those criteria.
In other words, I am not at all sure that we can be entirely happy with a situation in which the axe suddenly falls at the end of an allotted period. If the Authority has comments to make on the record of a company, on its progress and on what it is doing, the Authority has a duty to make those comments on a more continuing basis, or there should be at least some kind of half-term report.
In saying that, I want to emphasise that if the Authority is to make such comments it is necessary that those comments should be made in every way publicly. To encourage the Authority to make comments privately to a company would give it powers of censorship which are, perhaps, even more objectionable than any other kind of censorship, in that it would be a kind of secret censorship. It would be exerting influence without the manner in which that influence was being exerted being seen by the public. Therefore, let us have a clear statement of the kind of criteria upon which the Authority is to base its decisions.
Next—this is equally important—I believe that the public is entitled to see and to scrutinise, to some extent at least, the bids which are made by various companies which seek contracts. Were we now to have an opportunity to study some of the bids which were made at the very beginning of television, we might find that there has been a conspicuous difference between performance and previous promise. At least the publication of these bids would show the public what sort of evidence was before the Authority and would enable the public to make up its own mind and make its comments through the channels which are open to it.
Further, it would have a salutary effect in that, if the bid had been published and if certain important points in the bids had been evident, comment would immediately occur if the promises which were made initially were not being kept. Therefore, this could have an important effect in maintaining standards once a company has actually got the contract.
Objections may be raised to this procedure. It may be said that one of the important considerations which the Authority has had to have in mind is the type of artistic and creative talent available and that sometimes people associated with a company making a bid might not wish their association to be known, unless they have been successful, since they may at that time have formal connections with other companies or with the B.B.C. If the connection of such a creative person is to be so important a matter as to weigh heavily with the Authority in its decision, I should have thought that it ought to be on a very much less tenuous basis than one where the person concerned is not prepared to stand up and be counted and be seen.
Next, I think there is reason to ask the Authority, when it makes its decisions, to publish at the same time some kind of judgment giving formally the reasons why it has preferred A to B, the reasons why it has taken certain steps. It has done so, up to a point. If the procedure were formalised to a greater extent, it would have undoubted advantages.
It has been suggested that we could go still further and have the entire proceedings held in public. I accept that there are difficulties about this, although


I think that there is possibly a case for some kind of cross-examination procedure to be adopted during the course of the investigations into the various bidders. I certainly think that the record of the proceedings ought to be kept and ought to be published once final decisions have been made.
The final point in relation to bringing these whole proceedings more closely under public scrutiny would be the consideration of some kind of appeal mechanism. Again, I realise that there are difficulties. One would not wish to establish some kind of appellate machinery which would gum up the entire works and which would necessarily encourage everybody who has been unsuccessful to appeal. But there are precedents for controlling appeals. In the law generally the right to appeal is not necessarily automatic.
I doubt whether the Postmaster-General would wish to exercise this function and be the person responsible for an appeal. It is certainly possible that he might be the person who could vet applications to appeal, and certain types of criteria could be decided upon which an appeal might be allowed to go ahead. Then perhaps we could devise some kind of machinery, such as a committee of the Privy Council, so that there would be appeal machinery.
I want to be clear about this. I do not want to be misunderstood. I believe that the Authority has discharged its functions in a highly responsible way, but we should be unwise to ignore the fact that the possibilities of corruption in this sort of enterprise are almost limitless; and perhaps, what is even more relevant, the possibilities of accusations—even ill-founded accusations—of corruption are clearly there. For that reason, if for that reason alone, some kind of appeal mechanism ought to be introduced.
I move on from the question of opening up the whole proceedings to public scrutiny to look at the constitution of the Authority itself. When it was orginally set up, the whole prospects for independent television were seen to be rather different. Certainly it was not possible to anticipate at that stage the kind of developments which have taken place. Without making any criticism whatsoever of the members of the Authority, I begin to wonder whether the Authority needs

strengthening in certain directions in order to enable it to discharge certain functions which were not envisaged when it was set up.
I have in mind the possible need for the presence on the Authority of one, two, or perhaps three, members who have had direct personal experience in producing, presenting, or otherwise managing, television programmes. This is important. The implications of having on the Authority people who are familiar with the practice of the Stock Exchange and various matters which flow from that will probably be taken up by other hon. Members.
On the question of having on the Authority people with a knowledge of television in a practical sense, there are some special points to be made. I want to look at a very new development. It is now proposed—I am sure that the House will welcome the proposals—that the Independent Television News should mount each night a half-hour news magazine programme. It is quite clear that this must be an editorial programme. It must be comment of some kind. This is a function which the I.T.N. has never previously exercised. To whom is it to be responsible—to the Authority? To what extent is the Authority geared, in the sort of way the B.B.C. is geared, to exercise some kind of control over balance, over the selection of material, and so on?
I am inclined to the view that the Television Act has, in many ways, proved to be rather more restrictive on television producers than the Charter of the B.B.C. The B.B.C. has an overall obligation to present a balance of programmes, to present minority opinion, and to behave in a generally fair way. It is an overall requirement. The Act at any rate tends to be interpreted as requiring independent companies to balance each programme within the programme. This can sometimes have some extremely unfortunate effects. I believe there was one quite recently.
One of the independent companies, as hon. Members will know, managed to secure an interesting, and I think important, interview with President Nasser. The company wished to put it out. It was not allowed to put it out in the one programme, unless it could put out simultaneously a corresponding type of


interview with an Israeli spokesman. The company therefore had to make hurried efforts to get this. It managed to get it. The net effect was that it had an interview with Nasser which had been prepared and recorded under ideal circumstances and which was a very telling interview; and then, added to that by way of balance, was an infinitely less telling interview with an Israeli spokesman. The result was that, in the struggle to secure balance within the programme, an unbalanced programme was produced.
I believe that had the company concerned been allowed to go ahead as it wished and then say, "This is purely the Arab point of view. We hope to bring the authoritative Israeli point of view in a later programme tomorrow", the interests of what we all have in mind would have been served. This emphasises the point I want to make. Is the Authority geared to undertake these rather delicate professional activities?
I had a personal experience of this kind. Many years ago I was endeavouring to present a programme on clean air and smokeless zones. I discovered that it was going to be extremely difficult to put on the programme unless I could unearth a reluctant representative from a backward local authority and drag him to the studio to say that he did not agree with clean air zones. This is not the sort of thing which was originally intended, nor what the Act specifically lays down, but it is likely to arise while the Authority continues to be weak in its personnel and in experience of these things.
The introduction of independent television has had on the whole an extremely good influence. The competitive influence has been valuable. It has had a valuable effect on the B.B.C. The improvement which took place in the B.B.C.'s news coverage was spectacular when it had competition. The one field in which I have some particular criticism is that of the regional programmes. This in part is because Independent Television in this field has not had the kind of competition from the B.B.C. that it should have had. The B.B.C., being very centrally based, has tended not to compete. One has only to go to the B.B.C. regional headquarters in Leeds or Manchester to see positive temples of unregionalism.

If the B.B.C. competed more in this direction the independent companies might have a better record.
In another respect, whilst the companies are acting perfectly properly, they are tending to take steps which I regret. Once they are in, and have the opportunity of amassing great profits, they use them to diversify. They take steps to get into parallel, indeed sometimes quite perpendicular, activities. The business of a television company is television. Nevertheless, we must be aware that the atmosphere of insecurity which is now enveloping this industry understandably will, if anything, accelerate the tendency to diversify. That will be to the detriment of television.
I pass on to something which I believe to be fundamental. That is the matter of diversification in another sense. I refer to the rôle and intervention of the Press in Independent Television. In the early days this was discussed at some length. To what extent should newspapers be allowed to take part in this immense enterprise? Certain newspapers expressed their views very strongly and later they expressed quite contrary views equally strongly. The fact remains that we have seen in this period an increase of intervention. We have seen recently in the award of contracts that it is perfectly simple for any newspaper to get into television provided it can associate itself with a bid in its own area.
If the company is not successful the newspaper will be interpolated into the one which is successful. We should examine to what extent this is a good thing. Are we concerned about an evolutionary process which could lead to these two great media coming under one unified control? This is something which the House should consider. What is the object of this exercise? Why are newspapers automatically to be allowed in? Is it because it is felt that they have a special rôle in interpreting local life? I remind the House that it is the people at the top—not the editors and those who produce the newspapers, who are moving into television—but the dynamism from the top. Or is there a feeling that the Press will suffer considerably from loss of advertisement revenue and therefore it has to receive a kind of oblique subsidy? If it is this, it is something we should either do or not do on


purpose. We should not merely allow it gradually to evolve.
I am as concerned as any hon. Member about the plight of the Press and the possible disappearance of newspapers. This is desperately important and the well being of the Press is important, but we should not allow it to have a subsidy through an evolutionary process which merely happens because of the way in which the Television Authority acts. Let us consider whether this in the long term is in the interests of the Press. When the driving force behind a specific newspaper—say such a local newspaper as I have in mind—is appointed to a key position in a television company, where does the interest lie? Will the tendency not be to concentrate on this new and important output, and will there not be a tendency to regard the particular newspaper as less and less important? Is it not pssible that in the long run individual newspapers whose heads are now moving into television might ultimately suffer since the degree to which their people enter into television must ultimately be at the expense of the newspapers?
I think many hon. Members would like to see new developments in this field. I should like us to explore more closely the recommendations of the Pilkington Committee. I do not agree with the whole Report, but I think one aspect was not pursued far enough. That was that we should consider whether or not it is possible to separate the matter of the sale of advertisements from the matter of competition in the producion of programmes. This is a matter on which I hope we shall hear some comment. I should like to hear about the limitation of profits. That becomes very apparent when we look at the extremely relevant article in this morning's Times' Business Supplement. We should consider the method which I think the Authority itself prefers of some excess profits tax based on capital employed rather than a levy which appears not to be acting in the interests—

Mr. Speaker: Order. We are on the Adjournment. It is not in order to suggest new legislation, but the hon. Member may refer incidentally to the possibility of new legislation.

Dr. Winstanley: I am grateful for your advice, Mr. Speaker. I have referred

incidentally to the possibility of new legislation. We might explore still further the idea of broadcasting being under some kind of unified control by way of a broadcasting commission such as was mentioned by the predecessor of the right hon. Gentleman. I am not asking for this so that there should be more interference but so that in the long run there should be less, because I believe in television. I believe in the people who do the work. I do not think it makes any difference whether that work is done for public or for private companies. I believe that the producer of television is interested in television and wants to get on with the production of good programmes but the arrangements at the moment do not always have that result. If there are difficulties in mounting a current affairs programme, sometimes in the end the producer in desperation will say, "Let us put on some girls or a 'quiz'. There will be no difficulty about that and no argument about balance." I should like to go on more about that, but I must not.
Most of the things I have said to the House today were said years ago in my party's evidence to the Pilkington Committee. We thought they were right then, and I hope that the passage of time and events which have taken place during that time will have led others to the conclusion that they are right today. I look forward to the contributions of other hon. Members on this subject. I believe they will be put forward with the intention of providing the best possible television, the best and widest range of choice of television, providing adequate protection—and they need some protection or reassurance—for those who work in television and serving the public interest along the lines I have indicated. In that spirit we selected this important subject for debate and discussion by the House today.

10.40 a.m.

Mr. Christopher Rowland: First, I congratulate the hon. Member for Orpington (Mr. Lubbock), whose researches, I understand, prompted this morning's debate, thereby, incidentally, ensuring such a large turn-out of Irish Nationalists on the benches opposite.
I congratulate the Independent Television Authority on the broad balance of decisions which it has recently announced. Before the decisions were


announced, it was said in many quarters that it would be difficult for the I.T.A. to alter the structure of the programme companies; that it would be impossible for newcomers to prove their ability in advance; that if any change were made it would, in effect, be self-criticism by the I.T.A.; and that it would be difficult to disturb the established commercial concerns. Lord Hill and his colleagues have shown that they have not been frightened by such considerations.
I turn now to what I regard as the good points of the decisions which have been announced. First, they have shown the authority of the Independent Television Authority. The Authority has asserted its rights. It has shown that it is interested primarily in programmes and only secondarily in the question of profits. I shall return later to defend that order of importance.
Second, the Authority's decisions on balance will have a salutary effect on the future of commercial television in this country, because any sensible television operator from now on will regard the retention of his franchise as one of the crucial factors in his operations over the next six years. There may have been some doubt about whether he needed to look very carefully at this during the past six years, but there will be no doubt about it in future.
Third—here I take issue with the hon. Member for Cheadle (Dr. Winstanley)—I believe that it is very good that the Authority's decisions were reached in absolute secrecy and confidence. In my view, there are no possibilities of corruption. But I am inclined to think that only in this country could an operation of this kind be done, and it is precisely because there is not corruption in our public life that this kind of thing can be done in secrecy anti confidence. I am sure that to do it in any other way, for instance, by throwing the matter over to a Parliamentary Committee, as is occasionally suggested, would be quite impossible.
I applaud the decisions announced, also, because Lord Hill has indicated that the Authority will set up a trust fund to assist those arts and sciences which support broadcasting, a trust fund drawn from the profits of the independent television companies. I hope that this will be the

thin end of, perhaps, a very broad wedge. Roughly speaking, the position at present is that the independent television companies have an income of about £100 million a year, out of which they have to provide one national network, and the B.B.C. has an income of about £64 million a year, out of which it provides two national networks and three radio services. Clearly, there is a large amount of money in independent television which could be used by the I.T.A. in its trust fund scheme to support all sorts of worthy enterprises.
Another reason why, on balance, I congratulate the I.T.A.—here again, to some extent, I take issue with the hon. Member for Cheadle—is that I think that it has been good to involve the Press in the way it has been done. I am inclined to share the hon. Gentleman's view that this has been an attempt to compensate the Press for a loss of advertising revenue, but I take the view that, if a small stake in commercial television is of great benefit to, say, the Observer or the Spectator, this is a desirable development, so long as it is kept within bounds. The small size of the stakes which have been given keeps it within bounds.
In this connection, one must bear in mind that the I.T.A. has at the same time severely cut down the stake of the Thomson Organisation in Scottish Television. In other words, although no one would defend a situation in which one organisation could have a controlling interest in the Press and in television, which is what the I.T.A. attacked in the Scottish instance, if the Press can have a small stake, this can be a useful and, perhaps, crucial factor in the finances of newspapers, including the provincial Press as well. On balance, therefore, I regard this as a move to be defended.
I come now to certain points of concern. Although I believe that the decisions should be reached in secrecy by the members of the Independent Television Authority—I congratulate them on the extraordinary confidentiality which they managed to maintain—I consider that, once the decisions have been reached, the applications of the successful applicants and a resume of the evidence which they put to the I.T.A. should be published. This is desirable so that not only the House but the public in general


may know what assurances were given about, example, the new programming scheme for the London weekend, about the invigoration of Welsh culture and about the increased identification of programmes with the Midlands, to be undertaken by Thames Television, the Harlech consortium and A.T.V. respectively. This should be on the record once they have been successful in their applications.
My second point of concern is inherent in what has happened, that is, the possible effect on the programme standards and operations of the contractors who now have only the fag-end of a lease—in other words, what one might call the T.W.W. problem. It is rather like the old situation in the United States when there was a "lame duck" President elected in November and not to be inaugurated until the following March. The Americans have cut that four months down to some six weeks.
In commercial television, we have a "lame duck" contractor with 12 months to go. It might be worth suggesting to the Independent Television Authority that the period could be cut down when it makes the next allocation of contracts. Although this would mean that the new successful contractor would have a correspondingly shorter period to get ready, some consideration should be given to the question whether the 12 months' period could be shortened.
The third point of concern is that, now that it has been shown that a contractor can lose his licence, there will be pressure in some quarters to maximise profits during the secured period of his licence. This goes against the argument which I put earlier, that a sensible contractor will try to make sure that his programme standards will ensure renewal of his licence, but within any programme operator there will always be two forces at work, one taking what I regard as the sensible view and the other saying perhaps, "We may lose our licence in any case, so let us make as much as we can while the going is good". The I.T.A. will have to spell out in the next two or three years that it will be bad business if purely business interests determine the programme standards of a contractor. But there may well be pressure in the other direction, particularly from the

financial elements involved in the programme companies.
Other points of concern have been expressed which, to some extent, I would play down. First, there is the question of the involvement of Members of the House. Second, there is the size of potential profits. I know that you will correct me, Mr. Speaker, if I go out of order, but I should like to say, speaking as one with no interest whatever to declare in commercial television, that I see no reason why Members of Parliament should not be not only directors but chairmen of commercial television companies. [HON. MEMBERS: "Oh."] I say that for the very good reason that I cannot distinguish between being chairman of an independent television company and being chairman of any other private commercial organisation.
Any such distinction would be very difficult to establish. If it is decided that chairmen of private commercial companies ought not to be Members of the House, we shall exclude a great many right hon. and hon. Members, not merely the hon. Member for Derbyshire, West (Mr. Crawley) and, in another place, the noble Lord, Lord Harlech. I do not think that it is the function of the I.T.A. to decide who shall and who shall not be a Member of the House of Commons. If the House takes this view—and clearly some hon. Members do—it is for the House of Commons to decide and not the I.T.A. Far too much fuss has been made of this, not least in the leader columns of The Times. I doubt if there is any suggestion from that quarter that Lord Thomson should have to give up his seat in the House of Lords.
I strongly take the view that the question of profits is not the most important point to watch. Throughout broadcasting, the most important thing is the programmes and their quality and standard. If large profits are made, that is a secondary consideration with which we should deal in its own right. We should not regard dealing with the profits as the first function, because in trying to do so it is possible to end up by adversely affecting programme standards. Any solution applied to the profit problem must apply the cutting edge of programme standards.
One of the currently fashionable theories, which was not advanced by the hon. Gentleman but which I expect to hear later in the debate, is that the way to deal with the problem of excess profits is to have a second commercial channel; in other words, that sheer competition and competition for advertising revenue will make profits more difficult to earn. I am sure that that is true both in theory and in practice, but we must consider its effect on programme standards. I have no doubt that two commercial channels competing for roughly the same amount of advertising revenue would have a damaging effect on programme standards. The competition—competition to survive in some cases—would be so intense that it would probably produce forces that the I.T.A. could not contain, however well-intentioned it was.
I, therefore, support the statement by my right hon. Friend the Postmaster-General in the White Paper, Broadcasting, Cmnd. 3169, that no fourth television channel is contemplated for at least the next three years. I hope that under this Government there will be no second commercial channel. I believe that the key point in broadcasting is that structure determines programme standards. In effect, the present structure is of two monopolies—a monopoly of public service broadcasting by the B.B.C. and a monopoly of commercial broadcasting by the I.T.A. I believe that monopoly in this sphere has produced good broadcasting and altering the structure in order to deal with the profits problem would reduce programme standards. In other words, one would be looking through the wrong end of the telescope.
Having said that, and having tried to make clear that programmes come first and that structure affects their standards, I agree that there is a problem about profits. Hon. Members on both sides of the House have doubts and reservations about the large sums of money which can be made in television and which are in effect allocated by the I.T.A. in giving out the contracts. There are various solutions. It has been suggested that there should be tendering for contracts, and that they should go to the highest bidder. I am against that. It would be difficult in some cases even

for the applicants to know what figure to tender. For instance, the cost of colour television may be greater than is realised, and on a tendering basis a licence could be given to contractors who end up by losing money.
The hon. Member for Cheadle, who has considered the allocation of contracts for motorway service stations, knows the kind of problem one can get into with that system. Another way of dealing with the problem, which I hope will be used to some extent, is for the I.T.A. to insist on high programme standards, because there is no doubt that they mean that less money will be made. I hope that the I.T.A. will carry on doing this. A third possibility is the trust fund, which I have mentioned, and which I said could be the thin end of a broad wedge. The fourth possibility is a higher rental charge by the I.T.A., and the fifth is a higher levy, by the Government. I tend to share the view of the hon. Member for Cheadle that it will be desirable if, in the light of recent and current events, the Government once again look at the Pilkington Recommendations.
I am interested in a speech made by my right hon. Friend the Postmaster-General recently to the Association of Broadcasting Staff. Referring to the present broadcasting system, he said that one of its defects is
the dichotomy between the public and private sectors",
which
… creates a financial problem of such dimensions that it is difficult to see the present arrangements continuing for more than the next decade.
He added:
Some Government with time on its hands in the future"—
I do not know which Government that will be—
is going to put the two institutions"—
that is, the B.B.C. and the I.T.A.—
into the melting pot and create a new structure which does not have an intractable financial problem built into it.
In other words, the financial problem of public service broadcasting is that when it does anything more it loses money, and that of commercial broadcasting when it does anything more it makes money.
I hope that in his intervention today my right hon. Friend may elaborate a little on what he said then. For example, perhaps he can say whether it would be possible to bring into effect the Pilkington proposal that the I.T.A. took all the advertising revenue and then gave contracts to programme producers. This would leave the I.T.A. with large sums of money which could perhaps be used to nourish an extension of public service broadcasting. Those are ways of dealing with what I think everyone agrees is the problem, but the secondary problem, of excess profits.
I conclude by, on the whole, congratulating Lord Hill and his colleagues on the way they have shown that they have power. They have given the commercial television world a desirable and salutary shake-up, and have shown that their main concern is to produce good programme standards, so far as they can accomplish it, and that everything else must be secondary to that.

10.58 a.m.

Mr. Paul Bryan: I am not sure whether this is a Liberal Supply Day or a Liberal Private Members' Day. Certainly, it is an historic day for the Liberal Party aid, like the hon. Member for Meriden (Mr. Rowland), I congratulate them on securing it.
The whole political world has been agog to know exactly what subject would be chosen. I was a little surprised that they chose this. Important as it is, and though it is a subject in which both the hon. Member for Cheadle (Dr. Winstanley) and I take particular interest, I had not judged it as the most critical problem facing the country today.
Some uncharitable people have said that possibly this is the only subject on which the whole party can agree. I do not think that that is quite fair. Reading an article in the Sun last week, it seemed to me that this was yet another subject on which they disagreed. It was an article that might fairly be entitled, "How to bite the hand that failed to feed you."
The hon. Member for Cheadle mainly concentrated, as did the hon. Member for Meriden, on the consequences of the 1964 Act as they have shown themselves in the recent allocation of programme

companies. But the 1964 Act is a consolidation of the Acts of 1954 and 1963, so before we discuss the explosion of 17 days ago. May I say a word or two about the 13 long years which led up to that event.
The Socialists opposed the 1954 Act which gave birth to independent television. They acquiesced in the 1963 Act, which acknowledged it as a permanent feature of our broadcasting system. The right hon. Gentleman chosen to perform the somersault on behalf of the party in 1963 was the right hon. Member for Sunderland, North (Mr. Willey). He must be their special somersault man, for once again he was selected for a similar act in the debate last week on the Leasehold Reform Bill. This volte face was a faithful reflection of the acceptance by the community of independent television. Its pioneers, both political and creative, can now take credit for what it has achieved, despite all the doubts and fears that were expressed in the early days.
As the hon. Member for Cheadle pointed out, its first achievement is undoubtedly the elimination of the B.B.C. monopoly and all the benefits that have gone with that elimination. The B.B.C. has been vastly stimulated. The public has had a better and wider choice. Competition has produced results. In the early days it was assumed that I.T.V. would excel in light entertainment and the B.B.C. in more serious subjects. Competition has forced comparative standards to fluctuate over the years. At this moment the B.B.C. certainly leads in sport, music and comedy. I should say that it is about equal with Independent Television in drama and light entertainment, and that Independent Television is rather ahead in current affairs.
If one wants to see what competition has done to current affairs, one has only to consider the coverage of something like the Middle East crisis in the past few weeks, and how well it was done by both channels. The public was much better and more vividly informed than it would have been 12 years ago. Independent Television took the lead in education, and it has been successful in identifying itself with local regions than the B.B.C. Competition has given people a choice of employer and an increase in rewards, while more promising career opportunities have attracted a much wider range of talent, especially from the


theatre and journalism, to television. The number and variety in character of the programme companies has generated competition between themselves—not so much commercially, because there is only one channel—but in ideas.
The success of the television companies is reflected in their success in the difficult American export market and in the many international awards they have won—ironically enough, including a number won by companies now to be relegated. Very high standards have been achieved by the best programmes. There are of course bad and mediocre programmes as well. But I think that, taken with the B.B.C. programmes, the British viewer is probably offered the best television in the world.
Now I come to the allocation of the new I.T.A. contracts. I wish that this part of the debate had been put off a little longer until some more dust had settled and passions had cooled. We would have seen rather more clearly what has happened and possibly what ought to happen. The extent of the changes has shocked the industry. The programme contractors argued, consciously or unconsciously, that the I.T.A. was responsible for programme quality; that the lack of excessive complaint from the Authority about their programmes must indicate approval and, therefore, a moral obligation to reappoint. But Lord Hill says:
Must the doors of independent television remain for ever closed to new applicants however good they are? If the answer is yes then those companies already appointed are there for all time. And the authortiy's answer must, of course, be 'No'.
It follows that the choice may well be not between a good applicant and a bad applicant but between a good applicant and one which after full consideration the Authority believes will be a better one.
According to the Act, Lord Hill is certainly right. If the interest of the viewer is paramount, as it must be, he is probably right. I think that there is general agreement that this wide-scale churn-up and general post on talent will reinvigorate programmes. Lord Hill can truthfully say that this policy has been clearly announced a number of times and, in particular, when the contracts were last reallocated in 1964.
With equal truth, Lord Hill can say that the procedure for the appointment

of companies seemed to have worked without public or Parliamentary criticism for 12 years. We in this House, during the debates on the 1963 Act, made no suggestions that the procedure should be changed. By that procedure, many applications have been judged and 14 companies have been appointed without, as far as I know, any great complaint either from those successful or otherwise.
Had no new companies been accepted among the recent appointments the criticism would have been that the I.T.A. was a closed ring; that if a company with the potential of the London consortium could not get an innings no one would ever try again.
So the I.T.A. has an unanswerable case. And yet nobody, including myself, is entirely happy about the settlement or thinks that the allocation should be done in precisely the same way next time. I fancy that some members even of the Authority itself are secretly somewhat aghast at how bold they have been and what they have done apparently in unison. Whatever the logic, one cannot help feeling sorry for T.W.W., its smaller shareholders, the executives who have to make a dying company continue to produce good programmes for the next year. They have no right of appeal and, under the Act, cannot have.
More serious in national terms is how A.B.C. and Rediffusion, as they contract and merge and while doing so probably lose staff, can continue to produce network programmes on which the system depends right up to the night of 30th July, 1968.
What about the mechanics of the system? There is something disquieting about fortune making or breaking decisions being made in secret. The Times tells us that the winners are making too much money, and it is not alone in saying so. The position of Members of Parliament and that of the Press has also been questioned. No other independent authority has such huge powers of patronage, and one is bound to ask whether this new demonstration of those powers is going to restrict initiative of companies. Will they be constantly looking over their shoulders, especially during the last two years of their contracts? I shall not try to deal with all these points, but I certainly want to deal with one or two.
First, should the I.T.A. judge behind closed doors? One's instinctive reply, "No". If a system of public hearings could he shown to work, I would support it. Several of the companies I have spoken to would prefer it. In the United States, the F.C.C. holds public hearings, hut, of course, in different circumstances. There is little thought there of displacing any companies and certainly no re-allocation every six years. I think that one has to get down to detail before one can decide whether it could be done here or not.
What would public hearings here entail? Presumably publication not merely of applications but of evidence and findings. Applicants would wish to be represented by counsel with rights to cross-examine competing applicants. Proceedings would have to be fully reported in the Press and on television. With a part-time Authority and 15 companies to appoint, it would take a very long time.
The position of the Press, with its large holdings in television companies would be difficult. Would it not be exposed to the charge that it was trying to influence the outcome of the hearings? The position of television executives who had promised their services but were working for another company would be difficult. The whole situation would inevitably be sensational. Television is a colourful world. Lew Grade fighting David Frost in open court for the London concession would be in news value quite irresistible, but it would not be the appropriate atmosphere in which to make balanced judgments.
The open court procedure is probably more effective in discovering facts, but when it comes to considering outlook and television policies the interview system seems better. Certainly tougher questions can be asked in private than in public. Whether the case is herd in private or in public, I agree with the previous two speakers that it should be possible for instance, to publish far clearer and more detailed indications of the criteria on which present companies and applicants will be judged and that these should be made public.
On the latest occasion, a document called "Particulars of Programme Contract" and marked "Confidential", was sent to each of the applicants for their

sole use. I should have thought that a popular edition of this detailed and technical document could have been issued to the Press for the enlightenment of the public. Possibly the I.T.A. Review might be used as a way of keeping the public up to date on changes and progress in I.T.A. policy.
I think that after the allocation of contracts the written applications of the competing companies might be published, as the hon. Member has said. I find companies very much in favour of that. Most of them are proud of the applications that they put in and it would make very interesting reading. One would be able to follow to what extent performance followed promise.
The second issue, which has preoccupied many papers—in particular The Times—is whether winners make too much money.
Before discussing this further and to get it in perspective, there are two points which escaped or nearly escaped The Times. The first is Capital Gains Tax, so that all their sums can be divided by three. Secondly, when they compare the situation today with the so-called Ferranti scandal, this is not comparing like with like. If Ferranti did over-charge it overcharged at the expense of the public. Any money being made this time by incoming I.T.V. companies is made at the expense of the outgoing I.T.V. companies. If that is doubted one has only to look at T.W.W. shares. The amount of money made by companies is to a large extent governed by the Government of the day. The 1964 Act provides for a levy to be imposed on the contracting companies. The level of that levy is decide by the Postmaster-General. As a guide to what it should be, Mr. Bevins said that it should be an economic rent for the monopoly enjoyed by the company. The Times seemed completely to miss this point. It advocated some sort of financial tendering by applicants. But the Government already lays down the price for a concession. It is geared so that the large companies pay proportionately more than the small.
The levy is one way of controlling profit, though not a very good one. It already takes a quarter of Independent Television's income. Unlike Corporation Tax, it is subtracted from income before


programme expenditure is settled, so its incidence involves the temptation, as has been pointed out, to cut that particular expenditure. A better way—and here I clash with the last speaker—would be the introduction of a second I.T.V. channel, as has often been advocated from this side.
Over these last months wild miscalculations were made in the value of some T.V. shares, because, despite warnings, everybody—City and television world alike—ignored the possibility of any major changes. In the future similarly wild miscalculations can be made by ignoring the chance of any increase in levy or the establishment of a second channel. Both are probabilities. I can think of nobody more temperamentally likely to raise the levy than the present Postmaster-General. As the Conservatives will win the next election there is likely to be a second channel.

Mr. Ness Edwards: Will the hon. Gentleman try to explain to the House how it is technically possible to have a second commercial transmission?

Mr. Bryan: That would be a very long explanation. I can only say that no Postmaster-General has yet said that it is technically impossible. In the last statement in the White Paper we were told that we would not be having one within the next three years, but not because it is technically impossible.
So important are these as factors in the assessment and management of I.T.V. that I consider that the Postmaster-General ought to lay down his policy with regard to the levy for the period covered by the concession. This would remove one of the unknowns in what, since 11th June, has become one of the most speculative of all investments.
I am not inviting the Postmaster-General to make some dramatic increase in the levy, for in a business as speculative as I.T.V. has now become, rewards must be high. On the other hand, I see no reason why they should be exceptionally high, except for those actively engaged in a company as directors, executives, or creative staff. I do not consider that indiscriminately offering outsize windfalls to the Press, to individuals and fortunate pension funds, is a good system for financing new television companies

in recent conditions when investment money for television was not hard to attract. These conditions may not recur. At the present time I think that those active in the companies must have a chance of an attractive pay-off, but the remaining money could be raised more cheaply through a local public issue made after the concession was awarded.
I should be interested to hear the Postmaster-General's view on the length of contracts, because this is very important. The original 1963 Bill proposed a three-year contract. This was amended in Committee to six years. Once we have the rewards right and two channels established, I think a period of 10 years would be more sensible. A three-year contract is so short that it really makes a concession permanent. In other words, nobody would ever take such a contract unless it was virtually certain to be renewed. A six-year contract is too short in a high investment industry of this sort. There must be a tendency to limit investment during the last two years. Had the companies known the danger in which they have been living, there would certainly have been less money invested in colour T.V. over the last two years.
I agree with the remarks of the hon. Gentleman the Member for Cheadle (Dr. Winstanley) on the Press. On this matter the views of this House have changed a good deal over the last three years. Pilkington actually came out against the Press having any holdings at all. In the 1963 debate a lot of Amendments were put down to try and prevent the Press coming in. However, some of our views have changed, because we are worried about the Press—we do not like seeing the death-rate among newspapers.
The Press is still losing advertising to television. Its holdings in television are therefore becoming comparatively more important. I fancy that the Guardian's 21 per cent. holding in Anglia probably means a lot to it. There is a danger of the Press becoming an appendage to that as the years go on.
One thing which I would ask the Postmaster-General to enlighten me upon is the position of the small papers that these regional I.T.A. companies run. I have had one or two worried queries whether the I.T.A. is to centralise a sort of I.T.A. Times and put out of work


some of the people who are running the televisicn papers for the regional companies.
The hon. Gentleman the Member for Meriden (Mr. Rowland) has referred to the position of Members of Parliament who may be directors of television companies. I agree with nearly everything he said. The Television Act actually defines the categories of persons who are disqualified from directing contracting companies. Parliament has therefore already considered and ruled on the subject. It is to those categories that it is presuming to add Members of Parliament if they are chairmen of companies. It is a pity that the I.T.A. has trespassed into a field which is surely the freehold of Parliament or a matter for M.P.s' personal decision. Presumably, the I.T.A. thinks that the position of chairman of a company is incompatible with the life of an active Member of Parliament, although not of a Peer, however politically active.
The Times says that no hon. Member should be a director. We in the House have a certain amount of experience of this. You, Mr. Deputy Speaker, were the deputy chairman of A.B.C., and I am sure that that in no way detracted from your duties in the House. I do not think that if the chairman of A.B.C. had been a Member of Parliament the position would have been markedly different. I do not agree about this incompatibility. Perhaps I should show my own interest. I was myself a director of Granada Television, but I resigned when I became the party spokesman on broadcasting matters. I should have thought that this was just the sort of decision which hon. Members should be left to settle for themselves.
The hon. Member for Cheadle has given us a brief look at the Liberal blueprint for Independent Television. He advocates the continuation of the independent companies, but only after stripping them of the profit motive and handing over to I.T.A. the task of selling advertising. The hon. Member will not be surprised to hear that, as a Conservative, I am fervently in favour of the profit motive and violently opposed to his idea, both ideologically and practically.
I doubt whether he will be impressed by my ideology, but in practice his proposition is about as promising and similar

in conception as the idea of turning Marks and Spencers into a co-operative store. While some of the expertise in buying and selling for which Marks and Spencers is famous would linger for a while, once the profit motive was removed the store would level down to the standard of any other co-op which matches private enterprise in nothing except for some strange reason the sale of milk. It should be recognised that at least one reason why Mr. Peacock, for instance, left the B.B.C. for the London consortium was presumably that he will have all the creative opportunity and fun which he had at the B.B.C. and make some money, too.
Section 17 of the 1964 Act empowers the Postmaster-General to lay down the number of hours of television which the companies can put on the air. Past Postmasters-General, including those of my own party, have limited this number of hours to the number which the B.B.C. can afford to put on the air. I have never agreed with this, but in those days there was some superficial force in the argument that Independent Television should not be allowed more showing hours than the B.B.C. Since then, advantages have piled up on the side of the B.B.C. to such an extent that it has become quite ludicrous to argue that more hours for Independent Television would be unfair to the B.B.C.
The B.B.C. has been given the enormous advantage of a second channel. That in itself gives the B.B.C. 80 hours against 50 for the I.T.A. companies. The B.B.C. maintains the monopoly of radio which, perfectly sensibly, it uses to advertise programmes on both its T.V. channels. For two years B.B.C.2 has had the monopoly of colour. It has the great advantage of being self-contained. It shows all, or almost all, it produces, whereas, owing to the nature of the independent television organisation, only 55 hours of the 125 which are produced each week are shown in one service area. The new instructions going out from the Authority about the new network arrangements will accentuate this difficulty.
It is therefore farcical to say that the B.B.C. operates at a disadvantage and must therefore in some way be placated by the restriction of hours of independent television. Independent television companies are perfectly willing


to put on television from eight in the morning to midnight and if the public can have this choice without any charge, it is surely wrong that it should be denied it. Industry is being organised more and more towards shift work and shift workers would greatly appreciate the opportunity of more day-time viewing and of repeat performances of programmes which they had missed.
I want finally and briefly to ask the right hon. Gentleman exactly the same question which was put to him by the hon. Member for Meriden. I also have here that quotation about putting television into the melting pot, but I will not read it all again. Nevertheless, those words, left in that form, certainly introduce yet another unknown factor into what has already shown itself to be a risky business. As one of the leaders of the party of planning, the right hon. Gentleman will, I am sure, want to make his plans for the future of the industry known for as far ahead as possible. I look forward now to hearing them.

11.25 a.m.

The Postmaster-General (Mr. Edward Short): It may be for the convenience of the House if I intervene at this stage. I should like, first, to thank the hon. Member for Cheadle (Dr. Winstanley) for raising this subject and to congratulate him on the fair, objective and constructive way in which he put his arguments, in striking contrast to some of the speeches which we have heard on the subject of broadcasting from the Opposition benches during recent months.
This controversy has arisen out of the recent award of contracts by the Independent Television Authority. Before I deal with all the many issues which have been raised, I should like to make two things perfectly clear. First, the Postmaster-General is not in any way involved in the allocation of contracts.
I did not intervene and I did not even ask for any information while the process was going on.
Secondly, I agree with the hon. Member for Cheadle that the Independent Television Authority is simply working the machine created by the House, discharging a duty laid upon it by Parliament, and it has done so quite properly. Having said those things, I shall not in

any way comment on the merits of the decisions about the contracts, but I will as far as I can deal with the many issues which have been raised.
As the hon. Member for Howden (Mr. Bryan) said, the law in this matter is contained in the Television Act, 1964, which merely consolidated the 1963 Act, which renewed, extended and amended the 1954 Act. It seems clear that in passing the 1963 Act Parliament had two things in mind as a result of ten years' experience of commercial television. The first was to strengthen the Authority itself in relation to the companies.
In the words of the 1962 White Paper, Parliament wanted
to give it a commanding position in the affairs of independent television.

Mr. Ray Mawby: indicated assent.

Mr. Short: I see the hon. Member for Totnes (Mr. Mawby) nodding assent.
The first objective, therefore, was to shift the centre of gravity, to shift the power solely from the programme companies, to the Authority itself.
The second objective was to syphon off some of the excessive profits which had been made during the first 10 years by the companies exploiting a public asset—the frequencies. There was a shift of profit to the Exchequer from the companies as well as a shift of power from the companies to the Authority itself. Those purposes of Parliament should be borne in mind when considering the events of the past few weeks.
I pass very quickly to consider some of the procedural matters which have arisen in the allocation of the contracts. The point which is most frequently put and which has been discussed today is whether I.T.A.'s consideration of the bids and its reaching decisions should be done in public. The hon. Member for Howden referred to the Federal Communications Commission in the United States hearing applications for transmitting licences, and this point has been made by many newspaper commentators. There are many variants of this idea. Some newspapers and some hon. Members advocate publishing merely the bids while some advocate publishing the judgments. My hon. Friend the Member for Meriden (Mr. Rowland) put another point of view.
When a body like the Independent Television Authority, which has such wide powers of patronage, exercises those powers, this idea has a great deal of attraction, but, as the hon. Member for Howden said, there is another side to the argument There is a great deal to be said for and against this idea of open adjudication. The present system has operated since Independent Television was created and as far as I know the first word of criticism has been when one of the sitting tenants is not reappointed. The people who advocate open adjudication should say exactly what they mean. As my hon. Friend the Member for Meriden said, if it means anything, it means that the Press would have to be present and then, clearly, television could not be excluded.
Certainly, if this happened in the full glare of publicity, legal representatives would be involved and we in the House know from experience that they would see that it was a very long-drawn-out process. The Stock Exchange would also watch the applicants' progress and would respond accordingly. The Press would take sides. Of course, the majority of the Press—the major newspapers—are involved either as sitting tenants or as applicants and one wonders how this would affect their attitude. The consequence of open adjudication, therefore, would seem to be the exclusion of the Press from the programme companies. I can see no other way, if this is to be done in public.
One hon. Member and many newspapers have suggested that the I.T.A. should state its reasons, but I disagree, because it chooses applications whom it honestly believes best in terms of television capacity. If detailed reasons had to be given, the Act would have to be amended to set out the criteria. The only criterion now is that it must interview the applicants and, exercising its judgment, pick out the one whom it thinks would produce the best television.
Another aspect is that, with open adjudication, Parliament would have to give the Authority the same kind of protection as the courts or Parliament enjoy. This would have to be faced as well. Another variant is the right of appeal. The hon. Member for Cheadle mentioned this. The question is, appeal to whom? I hope never to the Postmaster-General. Would a committee of lawyers be better

able to judge than the 12 people engaged in the Authority's day-to-day work? In another context, I do not think that they would be any more likely to be right than three Privy Councillors were to be right and the whole Government and their advisers wrong on another issue. I see nothing to be gained here.
My conception of a public corporation in this country is that we should either back it up or sack it, but not muck it about. We should sack it or get rid of it or change it but not mess about with it. Many bodies award huge contracts. I myself, as the Chairman of the Post Office Board, each year award contracts of hundreds of millions of pounds to quite a small number of telecommunications firms. It would be logical, therefore, for those who advocate open adjudication for the I.T.A. to say also that this process of awarding contracts, for example, in the Post Office should be done in public and that the bids should be made public.
Another idea which has been raised today and by a number of commentators is that the companies should be told on a continuing basis how they are doing, that there should be a sort of mid-term report to them by I.T.A. In effect, this would mean I.T.A. or someone else saying, "Do this or do not do that, or at the end of the term, you will not get the contract." I should have thought it highly undesirable for anyone to say anything of the kind to one of the contract companies. If a company is not doing its job, it could and should be replaced if a better applicant appears.
Under the Act—this is not often appreciated—the services are provided by the Authority as principal and not by the companies. The companies in law are the Authority's agents and the Authority is answerable—

Mr. David Steel: The right hon. Gentleman drew a comparison between I.T.A. contracts and his own, but surely he accepts that there is a basic difference, in that he, as Postmaster-General, does not say to one manufacturer, "You may manufacture for 10 years anything you like and make as much money as you like," and to another, "You must cease manufacturing for the next 10 years."

Mr. Short: This is not strictly true. We do award contracts to companies, at the end of which we may change the company. There is not a great deal of difference.
The hon. Member for Cheadle mentioned the composition of the Authority. It has 12 members, who are appointed by Order in Council on the advice of the Government, which means, in effect, selected by the Postmaster-General. They are a balanced body of people with a wide range of opinion and experience, and I would hesitate before bringing in a large element of expertise to television. It is much better to have people who can absorb, weigh and analyse the expert opinion which is always available to them and reach decisions objectively. This is much more sensible. However, vacancies frequently arise and I will bear the hon. Gentleman's point in mind.
My hon. Friend the Member for Meriden and the hon. Member for Howden also raised the question which has now arisen for the first time, of a "lame duck" company. Of course, there are dangers here, and I do not know the answer. This problem is inherent in the present system. If it is possible to change one of the sitting tenants, there is always the possibility of a lame duck company, but I do not know how to deal with it, given the present system. I should have thought that one year was enough for a new company starting from scratch with nothing more than a brochure and a number of attractive young men to get the thing off the ground, but I think that they will bear the point in mind.
I now turn to the case of T.W.W. As I understand, the I.T.A.'s decision was not because T.W.W. was regarded by I.T.A. as having failed to make the grade, but because the new consortium convinced I.T.A. that it could do better. The decision has aroused controversy. First, as to the position of the shareholders, I think that, to get this in perspective, it should be remembered that there has been a great deal of diversification in the activities of television companies and that 30 per cent. of T.W.W.'s profits comes from sources other than television. This should be borne in mind. The I.T.A.'s decision has certainly reduced the value of the shareholders' investment,

but the Act does not say that the sitting tenant must have any preference or that no speculator should ever lose.
Because of this certainty, there is a higher degree of risk in this type of investment. There is risk, of course, in any equity investment, but the higher the profit, the greater the risk and the greater the risk the higher the dividend. This is recognised. This risk here is very high, but the profits have also been high and capital appreciation has been considerable. I saw Lord Hill's letter to Lord Derby in the Press, in which he pointed out that, on an original investment of £1,000, the value today would be £10,000. In addition, £10,000 of dividend after tax would have been received. Having had the profits and this very large capital appreciation, the investor cannot now be heard to say that he does not want the risk as well. He has accepted the high profits and the risk, and that is as it should be.
Parliament has entrusted the Authority with the task of deciding how best to serve the public interest, and if it decides that the best way is to change the tenant it has a duty so to decide. I believe that it has sought to protect the shareholders of T.W.W. T.W.W. will be able to acquire 40 per cent. of the non-voting stock in the new company, and, again, Lord Hill has suggested in his letter to Lord Derby that, perhaps, he would consider giving some kind of preferential allocation of these shares to investors who stand to lose the most.
On the question of staff, it is a condition that all companies taking on staff should give prior consideration to people already employed in independent television. I understand that discussions are going on with the trade unions to give effect to this ruling. As regards studios and television assets, T.W.W. may, if it wishes, sell them to the new consortium.

Mr. Robert Cooke: What happens if the new consortium decides that it does not need the Bristol studio, which has been a "white elephant" since it was built?

Mr. Short: That is one of the facts of life in the present system. It is something which must be faced.
I turn now to what the hon. Member for Cheadle regarded as one of the most important questions—I agree with him—the question of Press participation in the programme companies. The policy of the I.T.A. emerged and became public at the Press conference given by the chairman on 11th June. Lord Hill referred to the reduction of the Thomson Organisation's holding in Scottish Television from 55 per cent. to 25 per cent., and he made it clear that he regarded the ownership of shares by representative newspapers as extremely valuable, but not to the extent of control by a single newspaper or Press interest.
As I see the matter, there are two points here. Television is growing in importance as a news medium, and a good newspaper—there are some good newspapers, of course—can bring great qualities to this development. Another point concerns the economics of the Press. The survival of a diversity of newspapers is essential to the survival of Parliamentary democracy. If democracy is not informed, it cannot survive. During recent years, the Press has encountered many economic problems, and there is no doubt that these have been greatly accentuated by the diversion of advertising to television.
It is a sensible approach to say that another source of income should be made available to the Press, to the more responsible newspapers. I think that there is a good deal to be said for this view. The position of the Press now is that it has interests in 12 out of 15 companies, compared with 10 out of 14 companies before the reallocation of contracts, but no newspaper and no Press interest has control of any company. I am glad that the hon. Gentleman raised this matter, because I regard it as one on which there should be public discussion, and I shall welcome the views of others on it.
I realise that there is another point of view. There are two sides to the question, as there are about almost every question concerned with broadcasting. The function of the Press is vigilance over the exercise of power and patronage and over such extremely powerful organs of mass communication as television. If the Press is too deeply involved in the companies, one may wonder whether it would be willing to bite,

whether the watchdog would bite itself. This must be borne in mind. It is good to debate this question which has emerged from the recent controversy.
Now, a word about what has been called, in the famous phrase, the licence to print money. The award of a contract presents a company with the chance to make an awful lot of money. The value of this consideration is realised from what I described earlier in my speech as public property, that is, the frequencies. But this is inherent in the pattern created by Parliament.
The existing companies are always at risk and the new ones will always gain. Excessive profits characterised the first decade of independent television, and, as I explained, it was for this reason that the 1964 Act provided for the levy or, as it was called, additional payments. Hon. Members who are interested will see the scale set out in Section 13(4) of the Act. The levy is calculated on net advertising receipts, that is, net after deducting advertising agents' commission.
It is not always realised that the levy plus Corporation Tax takes three-quarters of the surplus of advertising receipts over expenditure. The Section of the Act dealing with this matter, Section 13(4), also enables me to increase or reduce the levy by Order. I assure the House that the rates are always under review, and that I should not hesitate to place an Order before Parliament if I thought it necessary to do so.
The hon. Member for Howden raised the question of a second commercial channel. The decision on the allocation of the fourth channel, or second commercial channel, must not turn on the need to solve a particular difficulty which stems from the structure of Independent Television as provided by the Act—this was how he put it—but should turn on an overall appraisal of the national interest. As the Government's White Paper said, very large developments in broadcasting are already in train.
We are beginning the colossal operation of changing over to 625 lines and colour on all channels. It is not enough to say that further developments would be desirable in themselves. The over-riding consideration is whether the country can afford it, to put the matter bluntly, and whether, in any event, we should be


ready at this stage to commit the last set of frequencies which will be available for years to come.
I come now to the position of active politicians as chairmen of contracting companies. It was made a condition of the allocation of the London weekend contract that the hon. Member for Derbyshire, West (Mr. Crawley) should choose between relinquishing either his membership of the House or his chairmanship of the company.
I remind the House, as others have done, that there is no legal bar to a Member being either chairman or a member of a board. What the House did in the House of Commons Disqualification Act, 1957, was to debar a Member from being a member of the Authority. It did not do the same for a Member of the House of Lords, apparently taking the view that there is a difference in political nature between Peers and Members of Parliament. It laid down nothing about membership of a programme company.
I have not discussed this question with the I.T.A., but I imagine that it looks to its duty to ensure impartiality in matters of controversy, industrial matters, political matters and current public policy and also its obligation to present news with accuracy. No one knowing the hon. Member for Derbyshire, West would doubt for a moment that he would observe these requirements in both the letter and the spirit—of course, he would—but I imagine that the I.T.A. takes a more general view, that it is not enough to rely on the argument that one has complete confidence in one individual.
I imagine that it takes the view that public confidence and public belief in actual absolute impartiality requires that the chairman should not have so active a commitment in a particular party. On the whole, this is a responsible conclusion to reach. I know that there is another point of view, but, on balance, I think that that is a fairly responsible position.
I have, of necessity, devoted the whole of my speech so far to answering specific points which have arisen in the debate and in the Press in recent weeks. There remains beyond all this the question of the longer-term organisation of broadcasting in Britain. The recently awarded

contracts will run from next July to 1974. Two years later, in 1976, the franchise of the I.T.A. and the B.B.C.'s charter, Licence and Agreement will end together. Recently, I have taken steps to ensure that the licences of the relay companies, which make up a very important element in our broadcasting system, will end at the same time. So, nine years from now, an opportunity will arise for a fundamental review of the whole system, because I.T.A., the B.B.C. and the relay companies' licences will all terminate at the same time.
As I have said on a number of occasions since I became involved in the subject, I cannot see the present kind of organisation lasting for very more than the decade which we have ahead of us before those changes take place. In 1969, the Post Office becomes a public corporation. The residual Minister will then have under his wing the two broadcasting authorities, the Post Office Corporation and a number of other residual activities, but he will be freed of all the day-to-day administrative work of the Post Office—that great mass of administrative work which weighs down the Postmaster-General. From that time, the residual Minister will be able to devote a great deal more of his time to broadcasting, and I hope that, in the spring of 1969, a long, cool look will begin at the whole system of broadcasting in this country.
In the past year, we have solved the two major outstanding technical problems of how to change over to 625 lines and how to give all channels colour. We have started both processes. However, the major organisational problems will become increasingly acute. What the final solution will be, I do not know. As Mr. Speaker has already reminded us, the rules of the House preclude us from discussing future legislation in a debate of this kind, but I believe that it is a matter for all of us in this House and in the country.
The hon. Member for Cheadle referred to Pilkington. I believe that a much more original solution than Pilkington will be required. I regard it as a supremely suitable topic for this House to rise above party politics and try to find a consensus. It is the kind of topic on which we can do this, and we have time to do it.
The debate today will have contributed to a clarification of many of the problems involved, and, once more, I thank the hon. Gentleman for giving us the opportunity of debating this subject.

Mr. E. Rowlands: Before my right hon. Friend sits down—

Mr. Deputy Speaker (Sir Eric Fletcher): Order. Mr. Robert Cooke.

11.53 a.m.

Mr. Robert Cooke: My contribution will be singularly brief. I have sat listening with great interest to the debate, but it has not really brought out anything very new.
Naturally, this subject of the I.T.A. contracts or, to give it its broader description, the working of the Act, on which the hon. Member for Cheadle (Dr. Winstanley) hung his speech, is a matter of public interest, but I am not sure that very much of what has been said today can help, because the I.T.A. has made its decision. It has produced a welcome shake-up, and we must wait and see whether the public benefit in the way that we hope. We have got the pattern of the programme companies in the single independent channel for the next six years, and the Government have apparently set their faces against any expansion into another commercial channel.
One hon. Member challenged my hon. Friend the Member for Howden (Mr. Bryan) about whether it was technically possible to have a second commercial channel. The Postmaster-General told us that, although he set his face against having one, it is certainly technically possible. In dressing up their reasons for not having a second channel, the Government have talked about the scarcity of these great resources and said that we must be careful before committing another channel to commercial television. We on this side of the House have made it clear that we hold a different point of view.
However, I give the House one new thought, and it is the only point which I want to make today. We could have a greater element of competition than we shall get even with the new companies if the I.T.A. gave a little more thought to the subject of overlapping. There are

many fortunate viewers at present who can receive a choice of independent television because they happen to be geographically placed on the border between one company and another. In some cases, the I.T.A. is happy that that should happen. In others, it does all that it can to stop it happening. I understand that there are even transmitters which are shrouded so that they do not cover the area which they could. The reason is that a company is given an area which is meant to be viable, and obviously must be protected from unfair competition.
That was all very well in the early days, but we see today that most of the programme companies are in a thoroughly viable state, and an increasing measure of competition would do them no harm. I hope that, with the agreement of the companies, we shall see a conscious effort for more overlapping. If a contract has been let and the company concerned is not to find itself with more competition than it expected at the outset, obviously adjustments will have to be made, but I hope that that will be done.
I come now to what is perhaps for me a rather parochial matter, but I know that the House is interested in the West Country, and I hope that the right hon. Gentleman the Leader of the Liberal Party will catch your eye, Mr. Deputy Speaker, and make a contribution. In the West Country, we have a very unhappy alliance with Bristol linked with South Wales, apparently indefinitely. I am glad to have the united support of the Liberal Party on this, because its members regard this link as an unhappy one.
I believe that the Harlech consortium did not want to have to take on Bristol, and one of the reasons why it got the contract was because it was prepared to give more emphasis to the Welsh content of programmes. Although there are various views about the merits of that, I hope that the Welsh will get a splendid television service, but I do not see why they should get it at the expense of a link with Bristol which is not wanted by all true West Country men.
There is a very simple way to get out of the difficulty. Even if we cannot have a situation in which Bristol is taken away from Wales, we can have an overlap and so produce competition in the Bristol


area. Westward Television, which operates from Plymouth, could be allowed to infiltrate a little further into the area of T.W.W. There is already an overlap. Why should we not have an organised overlap? It could be a gradual process and, if it was seen that the Bristol advertising revenue was going to Westward Television, which was doing better, the I.T.A. could watch the situation. But at least we could have free competition, and it might result in a genuine West Country television service instead of the unhappy link with Wales.
This is not just a West Country matter, because there are other regions where the same sort of thing could work by means of a conscious overlap rather than a mere accidental one, and, while the Postmaster-General will not interfere in this, I am sure that our views will not go unheard by the I.T.A. In fact, I have felt its presence with us this morning. I hope that it will bear in mind these suggestions and that we shall see not just a static state of affairs, saying that the book is written for the six years which follow, and that, even if the Government will not let us have a second channel, at least we shall have more competition.

11.59 a.m.

Mr. Hugh Jenkins: I have no doubt that the right hon. Gentleman the Leader of the Liberal Party wants time to reply to the debate, which his party has so usefully initiated. I am sure that he should have it. As a consequence, I shall have to restrict the time which I had intended to devote to this subject.
There are one or two comments which ought to be made. We are discussing this morning the consequences of the breakdown or destruction of the assumption of permanence which has existed among the programme companies and I.T.V. All have acted on this assumption. They have offered their shares on the assumption that the goodwill would exist forever. Employees have been engaged on this basis and taken into pension schemes. Suddenly, everybody has woken up to the fact that it is an assumption, and is surprised that the Authority has done what it is entitled to do.
The action which has been taken raises two points. First, is the whole

system right? If the answer is "No", what can be done to put it right? Secondly, assuming, as I think we must, that no immediate changes are to be made in the whole system, what can we do within the context of the present system to mitigate what has been happening during recent weeks? It is to these points that I would like to address myself.
It raises the question whether it is right that the public should be invited to subscribe to programme companies who hold out to their shareholders and staff an assumption of permanence which they have no right to offer. Is this proper for the operation of the equity market? My conclusion is "No". I do not draw the conclusion that advertising as a source of revenue for television is wrong, certainly not. I do not draw the conclusion that the programme companies should not exist, and that the diversification and independence which they enjoy—they do not enjoy enough, they ought to enjoy much more—are not right, but I ask my right hon. Friend to consider whether they should be the sort of companies which advertise their equity and exchange their equity on the Stock Exchange. I suggest that the programme companies, while continuing to operate in the same manner as they do at the moment, should become trust bodies, and I hope that when my right hon. Friend is considering the longer-term future of television he will pay a little attention to this.
One of the things to which insufficient consideration has been given is the rather unique position whereby this House indirectly grants a public monopoly. With respect to my right hon. Friend, this is not the same thing as offering for tender among a number of companies something which they can take if they succeed, and which they continue to offer. The situation is sharpened by the fact that the Chairman of the Authority, who was appointed by the party opposite some years ago, now in turn grants a licence to programme companies which have as members of their boards other hon. Members on the benches opposite.
No one is suggesting, I think, that this in itself is prohibited under the present system. What I question is whether a system should exist which permits it to happen. This is something which we


ought to question. In other words, not only should there be no corruption, but it should be seen that there is none. It should be obvious that there cannot be any. This is one of the things which I hope my right hon. Friend will consider in the long term.
I come now to the shorter term. What can be done immediately, within the present system? One of the most important things which ought to be done is not to change the amount of the levy taken by the Government, but to change the incidence of its application. At the moment the levy is taken from the gross receipts of the company. It should be taken from the gross receipts less certified programme expenditure. It could be a larger percentage of that smaller sum so the Government would receive no less money than at present. They could even receive more.
If the levy were operated after programme expenditure, the consequence would be that the money would not be taken at the expense of the programme, and thus at the expense of the viewer. No one should lose touch with the fact that the object of the programme companies is to produce television programmes for the entertainment of the public. They are not there to enrich themselves and their shareholders, or for the benefit of their employees, although their employees ought to be considered. One of the consequences of the breakdown of the assumption of permanence is that the employees find themselves in the position that the careers to which they have looked forward have suddenly been cut off, and life is very uncertain for them.
What we have to ask the Authority to do if we are to assume the continuation of the existing set-up is to accept greater responsibility for the permanence of the employment. This must be the responsibility of the Authority, and I hope that it will accept it. Just as my right hon. Friend has said that it has a direct responsibility for the programmes themselves, so also does it have a more direct responsibility than it is accepting at the moment for the continuity of employment of the people in the various companies. If performance is to break down, if there is to be no real permanence, the only permanent organisation,

the Independent Television Authority, must be responsible for maintaining the continuity which the programme companies can no longer offer.
Those are one or two of the points that I wanted to make. It is not only a question of continuity of employment. There are also questions of status, of preferment, of the possibility of a career, and of promotion. These are some of the things to which some of the people in the programme companies are no longer able to look forward with the certainty which they thought they had before these changes were made.
The fact that the Authority has shown that it does not intend to be a mere cypher may have a damaging, rather than a beneficial, effect on programmes unless the actions which I have suggested are taken. If companies are to have only six years of life, and they are to remain profit-seeking organisations, they will have an extremely strong temptation to salt away as much as possible, and to minimise programme expenditure, and, secondly, to diversify their activities so that when the licence goes they can still tick over in other enterprises. These are things to which insufficient attention has been paid. It could be seen by a programme company that in these circumstances its duty to its shareholders is to spend as little as possible on programmes, to protect their future interests. This is something to which the Authority should pay attention.
The change needed to remove this temptation, or at least to minimise it, is to be found in Section 13 of the Act, which is the one to which I have referred, and that is to change the incidence of the levy. The consequence of applying the levy after programme expenditure would be quite profound, and would do much to remove some of the difficulties which have brought to a head by the decision of the Authority—I think the right decision in principle—given the present system under which it works which I think is fundamentally wrong—that permanence is not a feature of the monopoly enjoyed by programme companies.
I come back to the point that I made earlier. I gravely question whether even a temporary monopoly in public information and entertainment should be


granted to profit-making private companies. I suggest that the House would do well to consider this matter.

12.9 p.m.

Mr. Jeremy Thorpe: I am grateful to the hon. Member for Putney (Mr. Hugh Jenkins) for having restricted his remarks. I hope that he did not exclude other matters he wanted to raise. If I may say so, he raised some extremely valuable points. I agree with many of them and hope to deal with some of them a little later. I also thank the Postmaster-General for speaking here this morning on what we believe to be an important subject. I hope that the House will feel that it is a useful subject for debate. I was a little surprised that the hon. Member for Howden (Mr. Bryan) should have thought that there were possibly more vitally significant matters for debate.
I take the view that we are dealing with a very great concentration of power; that it is a power bestowed by Statute; that Parliament therefore has a responsibility; that there is grave public disquiet, and that the record of my party has been to try to stimulate debate, on those rare occasions when we have been afforded those opportunities, on matters that either might not otherwise be debated or for which it might be difficult to find time.
Before the war, the Liberal Supply Days were conspicuous as occasions when we drew attention to the need to rearm, and it was then that Sir Winston Churchill made some of his most famous speeches. I must say that I had expected the hon. Member for Howden, whose interest in broadcasting is so great that he has concerned himself not only with legal but with other forms of broadcasting—and has even boarded a "pirate" radio ship—to be just a little more enthusiastic.
I approach this subject with some nostalgia. Those of us who were actually performing in the early days of Independent Television, when one almost expected, I know that I did, to have a pneumatic drill come through the ceiling just as one was about to start an interview, feel saddened that some of our old friends are either going or are being restricted. I shall not comment on any particular company, because I am more

concerned that the system should be examined.
Whether we like it or not, there is no doubt that Parliament has conferred a tremendous power of profit making. The Authority is allowed to say, "You will no longer make a profit" or, "You may now start to make a profit" or, "You are the people who can invest in shares to a percentage that we will lay down." Financially, this is to us almost a South Sea Bubble, with the attendant financial hazards removed.
If one thinks of 275 per cent. capital gains, which The Times has suggested for one consortium, or 650 per cent. capital gains, as the Economist suggests, and shares that are worth £1,200,000 million more than at the time of purchase, there is no doubt that these are tremendous profits and capital appreciation, and if they had been made by any other industry it would have been before the Monopolies Commission months ago. Perhaps the most out of place programme to put on Independent Television would be "Double Your Money", because the multiplier is so much greater that it is almost impossible to assess.
I believe that Parliament did not intend good television programmes to have to depend on vast profits guaranteed for the benefit of some and to the exclusion of others. This is not a Marks and Spencer case, as the hon. Member said of the present system. Marks and Spencer make a profit out of selling merchandise, but if it were to be equated with Independent Television we would be giving it the statutory monopolistic right to go into the bookmaking business as well to the exclusion of everyone else. We are in favour of the profit motive, but we are not in favour of the excessive profit motive. Therein lies the difference.
What is the solution? Let us, first, consider profit. One suggestion is monopoly value in rather the same way that when people used to apply for the licence of a public house the monopoly value of the area would be assessed and that would be the figure to be paid. I agree with the hon. Member for Meriden (Mr. Rowland) that this would be a bad innovation as it would mean that financial considerations, the price which the consortium was prepared to pay, might well outweigh the artistic merit of the group


concerned. To act on that basis is dangerous.
I disagreed with him when he said that better programmes mean lower profits. On the contrary, I think that most bad programmes are those on which too much has been spent. For instance, I believe that the trouble with party political broadcasts is that far too much money is spent on them. There are so many diagrams, shots and films that the public is bemused. One of these broadcasts that I was fortunate to be allowed to produce and which got a very good Press was produced for £87—although, of course, its value was in inverse ratio.
If monopoly value is out, there is the possibility of using the levy in order to have a limitation based on a fixed percentage return on capital. Here, I agree with the hon. Member for Putney that this should not be a percentage on gross receipts, but on net receipts—receipts after having taken account of the genuine certified costs of the contracting company.
Then there is the Pilkington suggestion that the Authority should be the purveyor of advertising and that—and this is where the hon. Gentleman, if he will allow me to say so, rather went wrong—the commercial competition and expertise should be on the side of the production and sale of programmes. If we do that we have to change the present network system, with which I want also to deal, and which I believe to be harshly restrictive.
Logically, if we take the Pilkington proposal it seems that we would then have to lay down the sort of emolument one would expect the chairman of a company to receive, or a programme controller, as one does in the B.B.C. In the B.B.C., the Governor is paid X thousands of pounds and the Director-General is paid Z thousands of pounds so that a man knows the reward he will get. If his prime concern is to make money—capital, profit and a "killing"—he probably will not want the job, but if he is concerned to make good television programmes there will not be too much opposition on that basis.
The financial structure of the companies is odd. It is a rather bastard form of capitalism to say who shall buy shares and in what percentages—a very arbitrary figure. Though T.W.W. share-

holders will be allowed to buy up to, I think, 40 per cent. of the non-voting shares in the Harlech consortium, it still rather smacks of the American idea of the winner taking the spoils. Here the winner takes all and the loser loses all. I cannot see why, if one wants to uproot the management it should be necessary to uproot the shareholders. After all, one can uproot a Front Bench without uprooting its back benches. It seems to me that the 8,000 or more shareholders in T.W.W., whose average shareholding is small, might have been dealt with in a better way.
I congratulate the London consortium on saying that it will give 30 per cent. of the equity to executives and talent. This is a good co-partnership proposal of which I approve. At the same time, it will be interesting to see how much the executives have and how much the talent. I do not say that they are necessarily self-contradictory, but sometimes one does get that impression.
Therefore, on the question of profit, it is not good enough for the Postmaster-General to talk of high profits because of high risks. There is grave disquiet in the public mind because of the monopolistic powers that Parliament has conferred on the Independent Television Authority.
I agree that because Parliament has in the ultimate to assess the powers of the I.T.A. it is not right that executives should be Members of this House. The position is rather similar to that at the Parliamentary Bar, where one cannot be a Member of Parliament because, technically speaking, one might have to appear before oneself. I would say in the case of the hon. Member for Derbyshire, West (Mr. Crawley) that he has probably been persuaded by Mr. David Frost that what is involved is not so much a programme, but more a way of life, and he has, therefore, changed it. It might also be said that the hon. Gentleman has put a new interpretation on what is meant by "office of profit under the Crown".
I thought that the Postmaster-General was rather timid and conservative in what he said about the secrecy of the hearings and the appeal procedure. I take his point that public hearings will mean fluctuations on the Stock Exchange and that it might be suggested that Mr. Lew Grade


was one up and that Mr. Bernstein had a better counsel and had made Mr. Peter Cadbury look very stupid in the box, or vice versa, but I see no reason why a broad prospectus should not be published in advance. It may be necessary to omit certain financial details, but I cannot see why, at the end of the day, the I.T.A. should not give some indication of the reasons for its award. It is wrong to give this enormous power without asking for any indication about the criteria on which the I.T.A. bases its judgment.
On the appeal procedure, the right hon. Gentleman cannot have it both ways. He cannot say, on the one hand, "We do not necessarily need more people with television expertise on the I.T.A.; what is wanted is men who can assess and judge", and on the other that he wonders why the Privy Council or some other body which has no television expertise should be any better than any other organisation. The same criteria apply in both cases; what is wanted is an evaluation. The Privy Council, when sitting in its judicial capacity—the Prime Minister has certain feelings about when it is judicial and when it is not—has heard appeals from the medical profession and on ecclesiastical matters, on which they are highly experienced.
My hon. Friend had in mind not an automatic right of appeal, but the case of a decision being regarded as ultra vires the Act and which was in any way felt to have been a wholly wrongful exercise of discretion. Rather like a case stated in court, if the right hon. Gentleman thought that a prima facie case had been made out, it would be possible for that body to consider it. There would seldom be appeals of this kind, but it would be a protection for the I.T.A. to know that there was a safety valve. When we are anxious to protect the public, we always do one of two things—either appoint a Royal Commission and then do nothing or have an appeal procedure which works quite well. Some sort of appellate body would be useful in this case.
I agree that it is unsatisfactory that sudden death should be able to overtake a commercial company and the Postmaster-General was rather timid in saying that he did not think that judgments could be periodically passed by the I.T.A.

In a different context, this is exactly what the Press Council does. It is true that it receives complaints from the public, but it passes judgment on whether a report was in bad taste or an invasion of privacy or unbalanced and slanted in the wrong way.
I see no reason why the I.T.A. should not be able from time to time to indicate what it regarded as the better programmes of the year and what it hoped might be considered in years to come, rather like the discussion programmes which the B.B.C. has at lunchtime, which are published and sent to many hon. Members.
The Postmaster-General said that newspapers bring quality to television, but I have seldom known any newspaper to have any effect on the editorial policy or the execution of any programme. With respect to the Postmaster-General, anyone with knowledge of programming knows that it is very unlikely that newspapers can greatly influence programme content. The idea seems to be thought up by one or two directors or executives, after which there are conferences and the matter reaches the drawing board. One of the very dangerous things is to allow people who know nothing about television techniques to try to produce.
The third network is a possibility and will spread the advertising revenue, but it is no answer to the present enormous powers which Parliament bestows and which calls for grave public concern. The present networking system, if it goes on until 1968, is highly restrictive. The companies are expected to take 32½ hours at a cost of between £3 million and £4 million, which they must pay whether or not they take the time. They do not even know whether it is economic, because the major companies have never put out the cost of this, and they should be made to do so. This is, therefore, a great disincentive to local firms to increase their 15 per cent. of locally originated programmes. This is a bad thing.
The hon. Member for Meriden made an interesting point, that the delay of a year was bad, as one company would be running down and probably tempted to diversify and salt away still more and perhaps skim more and more—I do not say that it will happen, but it is a danger—while others were getting tuned up to take over. This is a great problem and should be investigated.
We are dealing with what is basically an industry of great importance, not only of executives, but of artists and technicians, people who can make a great contribution to our cultural life and, indeed, our balance of payments. They should have security, but not too much. On the other hand, we are dealing with a power cornferred by Statute of enormous proportions in its effect not only on the lives of people closely concerned and influenced but upon the ability to say who shall be and shall not be allowed to control this medium, to make vast profits into the bargain and to benefit from enormous capital appreciation.
It is not right that Parliament should continue to say, "Perhaps this power is unfortunate and greater than that in any other industry, but, after all, there are risks; let us leave it at that." There are not risks, not the sort of risks which there were at the beginning of commercial television, when a company like Rediffusion would lose up to £3 million and still keep pretty cool heads and carry on. The Daily Mail and the Daily Express both scurried out from their various interests, but companies like that initially bore the brunt of commercial television.
Therefore, Parliament should from time to time "take the pulse" to see whether we really intended, in granting a monopoly to make it one of such enormous value. Lord Thomson's remark about it being a licence to print money does not apply today. Now, the I.T.A. provides the printing presses and the ink and all that the consortia have to provide is the paper. There is, therefore, real disquiet and I do not think that the Postmaster-General has recognised it in the way he should.
However, I hope that by initiating this debate, which was ably opened by my hon. Friend the Member for Cheadle (Dr. Winstanley), we have provided a useful occasion and that Parliament will have realised its responsibilities in this matter.

Mr. Alan Fitch (Lord Commissioner of the Treasury): I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

AID TO UNDER-DEVELOPED NATIONS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitch.]

12.28 p.m.

Sir Cyril Osborne: On 4th May, I asked the Minister a Question on overseas aid and I am grateful for this opportunity to pursue the matter, because the answer was not satisfactory or sufficient. I would remind the Parliamenary Secretary of the background which justifies the demand for greater overseas aid. There are two reasons.
First, there is the unequal and unfair distribution of the world's wealth. The income per capita, which is a rough estimate of the standard of living, in the United States is 3,220 dollars a year, and in Vietnam it is 92; in the United Kingdom, it is 1,688, and in Indonesia, it is only 49; in Canada, it is 2,284, and in India it is only 89. In the other section of the world—the Communist world—in Soviet Russia, it is 1,253, and in China, it is only 74.
Some years ago, when I was in Peking, Marshal Chen-Yi, the Foreign Secretary, said that the vast difference between the affluence of Soviet Russia and the poverty of China was one of the important factors causing the difference between those two great Communist Powers.
It is my contention that the white, industrialised and wealthy section of mankind is living between ten and fifty times better than the poor, coloured and raw material producing nations. Our increasing affluence is based upon and dependent on their deepening poverty and this really ought to strike the conscience of mankind to have something done to put the situation right. Four years ago in the Indian Parliament, the matter was brought out most starkly. The then Leader of the Opposition in the Indian Parliament said that there were 270 million Indians living on 3½d. a day each. Mr. Nehru, who was then Prime Minister, denied that figure. He said that it should be 1s. 3d.
Even conceding that it was 1s. 3d.—and The Times said that it would rather take the figure put by the Leader of the Opposition—when we remember that


the average industrial wage for men in this country is £20 a week, one has an indication of the vast gulf between our standard of living and that endured by the vast majority of mankind. It also indicates the immense sacrifices that will be necessary if justice is to be done between the white peoples and the coloured peoples of the earth.
These problems cannot be solved by sentiment, no matter how well founded or well intentioned. The main cause of this poverty is, I believe, the tragic turn in the terms of trade over the last 12 to 14 years. The terms of trade have gone against these poorer, coloured people, who produce the raw materials necessary for our high prosperity. The manufactured goods price index in 1953 was 96; today it is 108. This means that we are charging about 14 per cent. more for the manufactured goods we sell to them than we were in 1953. On the other hand—and this is the basis of their deepening poverty—the primary product price index in 1953 was 102; it has sunk to 93. Therefore, we are paying to these people for the commodities they produce which are so necessary for our standard of living, 10 per cent. less than in 1953.
An eminent Soviet economist estimated two years ago that, if the terms of trade had remained the same as in 1953, we, the white, favoured wealthy industrialised nations would be paying to the poor, raw material producing coloured peoples of the world something like 14,000 million dollars a year more for what they are producing for us.
What we are giving them in aid is piffling. It is as though we stole £1 from them and gave them 6d. to get a cup of tea. This is the real trouble and the basis of their poverty and on this I ask the Government whether anything can be done. It seems to me that the only solution to these great problems is for world commodity prices to be increased, doubled or trebled. I know that it will be difficult but I suggest to the Government that there should be international marketing boards to control the supply and purchase of these basic raw materials in order to give the producers a better price for what they are producing.
For example, the price of raw rubber—natural rubber—is 17½d. per lb.,

which is the same price as 20 years ago. But the value of sterling, in which we buy that raw rubber, has depreciated since the war to about one-third. If we were to pay the rubber producers a fair price, on these facts we should be paying them three times what we are now paying them. Yet Indonesia, which producers our main supplies of rubber, has an income per capita of only 49 dollars a year as compared with our 1,688.
It is footling to send these countries bits of aid. We have to pay them more for what they produce for us. I know that this is a difficult, complex international problem but I ask the hon. Gentleman to consult his right hon. Friend and, through him, the Cabinet to see whether, through United Nations Special Agencies, something more could be done to get a better price and to stabilise prices for the poorer peoples of the world.
The second problem which causes their poverty is the growth in population. We have heard much about the population explosion. I believe that it is an even greater cause of the poverty of coloured peoples. It is estimated that the world population is 3,300 million. United Nations experts estimate that, by the end of the century, it will have risen to 7,000 million and that, in 70 years time, it will be up to 14,000 million. Experts of the F.A.O. two years ago estimated that world food production would have to increase fivefold to give the world population of nearly 7,000 million a tolerable standard of living by the end of the century.
During recent years—and this is the tragic side of it all—world food production has scarcely increased at all. So it is obvious that mankind is breeding himself into certain starvation and this is the second point I wish to raise. It is often spoken of in the popular Press as though the population explosion is a temporary freak of nature that will pass, or is an act of God. It is neither. It is manmade and will go on and on and will get worse for the simple reason that medical science over the last 30 or 40 years has produced antibiotics that have largely eliminated the old killer diseases like cholera, typhus and malaria.
It has also helped to do for the coloured women what the white women


have been lucky enough to enjoy for many years. It has reduced the rate of infant mortality. Some years ago in Bombay this was as high as 500 per 1,000 live births; now it is 135. In the United Kingdom it is 23 per 1,000 live births and in the United States only 17.
If the coloured women of the world, thanks to medical science, have their infantile mortality rate reduced to the level of the white mothers, the growth in world population will be something that we cannot comprehend, but surely we must all hope that the coloured mothers will have at least as good attention as white mothers get in this country. It is a frightening thought that India, with its deep poverty and 89 dollars per year income per capita as against our 1,688, will this year increase in population by 12 million. There will be 12 million more mouths to feed in India next year than there are today.
It is fair for us to tell those we try to help that, unless they help themselves by controlling their own increase in population, nothing that we can do will help them to climb out of the pit of the deep poverty which they endure at present.
In view of those two fantastically difficult problems, I want to ask the Minister one or two questions about what the British Government are doing. In answer to a Question I asked on 4th May the Minister told me that the United Nations Special Agencies were granted £15·6 million out of our funds in 1964 and that that was increased to £19·7 million last year. I am glad that the amount has been increased, but it is very small. In view of the size and urgency of the problem, that amount is merely playing with it.
Whatever people may say about the failure of the United Nations in political matters, no one can deny that the United Nations Special Agencies have done, and are doing, a very fine job all over the world and that they ought to be supported more by us. In those exchanges on 4th May my hon. Friend the Member for Haltemprice (Mr. Wall) interrupted and said that we were second only to America in our support of the United Nations Special Agencies. That may be true, but it is not enough. Cannot we grant more money in that way?
Cmnd. 3180 states that the target—not the amount spent—for overseas aid in

1964 was £190 million, in 1965, £205 million, and, in 1966, £225 million. This year we dropped that figure to £205 million, a cut of £20 million. For a nation with the colossal gross national product that we enjoy, which spends over £2,000 million a year on drink, tobacco, amusement and gambling, to cut this vital programme by £20 million, because it will hurt us, is a terrible thing to do.
We cannot help these people, unless we are prepared to sacrifice. It will mean a very severe cut in our standard of living. We cannot play Santa Claus to them and expect the American taxpayer to pay for it. The gap between their standard of living and ours is so enormous that I wish the Government would do what Mr. Gaitskell did in his Budget speech of 1951 and say to the people, "You have got to accept a lower standard of living". If the facts were put before our people, I think that they would accept the need for that.
Voluntary organisations like Oxfam, the Save the Children Fund, Christian Week, and all the rest of them, do a fine job. They are supported by fine and noble men and women throughout the country. However, what they do does not begin to scratch the surface of the problem. They collect £8 million per year to be distributed amongst 2,500 million desperately poor people. We are salving our conscience by subscribing to these very worthy causes, but we are not beginning to meet the problem.
Although these voluntary organisations are not really touching the problem, they are doing good, in that they are acting as propaganda and are drawing the people's attention to the need for the overseas aid and for the tragic poverty of the people overseas. Is it possible for the Government to get the voluntary organisations together so that they will increase their propaganda? Will the Government set the facts before our people and say, "If we are to help, we have to give much more and it will cost us something. It will hurt us. Only in so far as we are prepared to pay and to be hurt can we help these unfortunate people".
I do not know, Sir, whether you saw Cliff Michelmore's T.V. broadcast "One World" on the B.B.C. on Sunday night. It was a very fine broadcast. It contained programmes from all over the world. It brought out, first, the fact that


we are one world and, secondly, the immense problem of hunger, of poverty and of the increasing population. It is along these lines that the Government should be thinking. What is being done by the Government? Cannot more be done through the United Nations Special Agencies?

12.45 p.m.

The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Albert E. Oram): The hon. Member for Louth (Sir C. Osborne) has understandably ranged very widely over this very wide topic. He will be the first to agree that a half-hour debate is not the best opportunity for doing justice to it. He is all the more to be congratulated on having taken the only immediate opportunity which has presented itself to him.
The hon. Gentleman has called attention to the enormous size of the world poverty problem and to the way in which it is getting worse as a result of rapidly increasing populations. He has drawn graphically striking contrasts between the standard of living of the developed world—ourselves, America and other countries—and that of the developing world, giving figures from India and Indonesia. I agree that it is not easy to set a figure per capita income on which we can place great reliance. The hon. Gentleman quoted the case of India. These statistics in an exact sense are not particularly helpful. They are, perhaps, useful in serving the purpose which the hon. Gentleman sought to serve of showing the stark contrast and presenting the enormous challenge that the problem of world poverty poses to the developed world.
The hon. Gentleman said that it should be a challenge to our conscience—in other words, that we have a moral obligation as people fortunately placed to do all that we can possibly afford to do to help the less fortunately placed. The hon. Gentleman went on in the latter part of his speech to suggest that this involves sacrifices by our people and that, if the case is put to them, they will be prepared to accept these sacrifices.
I go a long way with the hon. Gentleman in that, but I would put one other side of this. Although he is right to suggest that we must make our aid programme

as large and as generous as it can be, and although the Ministry of Overseas Development has made it clear that our prime concern is to achieve the development of the developing countries, it should be recognised that out of the provision of aid come consequential advantages even to us. There is a good deal of mutual aid in this business that is not always sufficiently recognised. To begin with, prosperity, like peace, is indivisible and it is not possible for one nation or one group of nations to gain continuing prosperity at the expense of another part of the world which remains poor. We are all in this together.
Secondly, a good deal of our aid is tied to exports from this country, and therefore our export performance is improved the more generous that we can be in providing finance for the development of developing countries. It is not always true, therefore, that doing something for the developing countries involves direct sacrifice for ourselves.
In this connection, I take up the point which the hon. Gentleman made about commodity prices. It is not always necessary that we make sacrifices in order to help the developing countries in the matter of trade. It may well be that the most useful action which developed countries can take to improve the export earnings of developing countries is to maintain a high level of economic activity within our own countries, thus increasing the demand for imports of raw materials from the developing countries. By this means, in a sense, the good fortune of developed countries can spill over into the developing countries through an increased demand for their products. This is another aspect of the truth that prosperity is indivisible.
The hon. Gentleman will know that these questions of trade in relation to aid are to be discussed on a worldwide basis at the second U.N.C.T.A.D. conference which is to take place in New Delhi in February next. Many of the matters are much more the concern of my right hon. Friend the President of the Board of Trade, but our Ministry has a direct interest, too. A good deal of preliminary preparation has been going on both in Her Majesty's Government and internationally, and I am glad to say that the U.N.C.T.A.D. committee which is concerned with the aid aspects of its work has


produced a statement stressing the need for an increase in the volume of aid and for a softening and harmonising of the terms of the aid given. I assure the hon. Gentleman that Her Majesty's Government, like other donor Governments, will be giving much thought to the agenda of the U.N.C.T.A.D. conference. It would be premature to come to conclusions now, but the prospect of the February conference will give a stimulus to the thinking of all industrialised countries on these important matters.
Another aspect of the dependence of developing countries on commodity trading which is closely relevant to what the hon. Gentleman said is the degree to which many of them depend on one or, perhaps, two commodities alone. Particularly on the technical assistance side, our aid programmes are directed, whenever we can, to helping the developing countries to diversify their agricultural economies. This is an important way by which we can help. About 30 per cent. of our aid which goes to help projects in developing countries goes to agriculture, and we discuss with the Governments of the developing countries how best to diversify their agricultural economies, having in mind their vulnerability as a result of being too dependent on one commodity.
I entirely agree with the hon. Gentleman that the population explosion presents one of the greatest problems facing the world today. He gave global figures showing how it can be forecast that the population will increase. It is in the least developed parts of the world that the highest rates of population growth exist. In Europe, for example, it is estimated that at the present rate of increase it will take 78 years to double the population, whereas in South America at the present rate of increase there it will take only 26 years. Thus, this problem, though a world one, is all the more significant in the developing world, and continued population growth at this pace in the poorer countries must inevitably offset, or more than offset, the increases in agricultural and industrial production which can be achieved and must tragically disappoint their people's hopes of rising standards.
This is why we are prepared to do what we can by offering expert advice on family planning. We are doing this by giving financial support to the International

Planned Parenthood Federation, to the tune of £50,000 a year over the next five years, and by seeking to build up in this country expert resources from which we can offer advice. We are planning, for example—this was announced in the White Paper to which the hon. Gentleman referred in another context—to set up a Population Bureau in this country which can be a centre at which knowledge and experience are gained and collected and at which personnel can be trained for visits to overseas countries in order to put at their disposal expert advice and assistance. We undertake, also, that doctors and nurses who come from developing countries to this country for training receive training in the subject of population control. We do what we can, too, in the United Nations agencies. Our delegates have often called attention to the problem. I assure the hon. Gentleman that we are doing a good deal in that field to which he rightly called attention.
Towards the end of his speech, the hon. Gentleman commented on the size of our aid programme, saying that our contributions to the United Nations Agencies were just playing with the problem. He will recognise that our contribution to the United Nations is only one-tenth of our overall aid programme, so that our total aid programme is about £200 million. I agree that, set against the enormous size of the world poverty problem, this is playing with it, but our aid programme has been steadily rising. In 1957–58 it was £81 million, and in the last financial year it was £213 million. There has, therefore, been a stepping up, although I admit that there has been a most regrettable set-back in the current year. I am sure that the House understands the reason for the decision to make a cut. The hon. Gentleman must realise that any aid programme can be successful only if it is based on a sound home economy. If things go wrong at home, our aid programme will go wrong.
We have made clear that the size of our aid programme will be reviewed periodically in the light of progress made in overcoming our economic problems. My right hon. Friend is constantly reviewing the situation in consultation with his colleagues. I cannot today say what the aid target will be in future years—the normal time for giving that information is


early in the calendar year—but I assure the hon. Gentleman that we are reviewing the matter and we look forward to progress as the economic situation improves.
In the few remaining moments, I wish to emphasise that the content of an aid programme is as important as the size of it. Our present arrangement whereby

we provide many loans interest-free is an enormous help to developing countries. The overall amount may look the same, but, if it is on interest-free terms, it is enormously more valuable to them.

It being One o'clock, Mr. DEPUTY SPEAKER suspended the sitting till half-past Two o'clock, pursuant to Order.

Sitting resumed at 2.30 p.m.

ROYAL ASSENT

Mr. Speaker: I have to notify the House in accordance with the Royal Assent Act 1967 that The Queen has signified Her Royal Assent to the following Acts:

1. Fishing Vessel Grants Act, 1967.
2. Remuneration of Teachers (Scotland) Act, 1967.
3. Deer (Amendment) (Scotland) Act, 1967.
4. Refreshment Houses Act, 1967.
5. National Health Service (Family Planning) Act, 1967.
6. Shipbuilding Industry Act, 1967.
7. Saint Barnabas, Lewisham, Act, 1967.
8. Wallasey Corporation Act, 1967.
9. Greater London Council (Money) Act, 1967.
10. Saint Stephen, South Lambeth, Act, 1967.

PRIVATE BUSINESS

CITY OF LONDON (VARIOUS POWERS) BILL [Lords] (By Order)

Second Reading deferred till Thursday, 6th July.

Oral Answers to Questions — SCOTLAND

Controlled Tenancies

Mr. Dewar: asked the Secretary of State for Scotland what estimate he can give of the number of controlled tenancies in Scotland; and whether he will introduce legislation to bring these properties within the provisions of the Rent Act, 1965.

Mr. Adam Hunter: asked the Secretary of State for Scotland if he will take steps to assist those people who own controlled houses and receive a rent too low to effect satisfactory repairs.

Mr. Bruce-Gardyne: asked the Secretary of State for Scotland what information he has regarding the average level of rents paid by controlled tenants in Scotland; and whether he will now take steps to bring these tenancies within the scope of the Rent Act, 1965.

The Minister of State, Scottish Office (Dr. J. Dickson Mabon): The number of controlled tenancies in Scotland is of the order of 200,000. A limited survey in 1963 indicated an average rent of about six shillings a week. Under the Rent Act, 1965, my right hon. Friend may make orders to convert controlled tenancies into regulated tenancies, but the machinery of rent officers and rent assessment committees cannot yet cope with more than the 100,000 existing regulated tenancies.

Mr. Dewar: Will my hon. Friend undertake to keep the matter under constant review? As the figures just quoted show, there is a large number of people—by no stretch of the imagination potential Rachmans—who cannot even recover their repair bills in a frozen rent structure which is considered to be unsatisfactory for 90 per cent. of the tenancies in Scotland.

Dr. Mabon: My hon. Friend is making a commentary on the situation which has existed for many years. It is rather a pity that a fair and sensible rent policy was not adopted some time ago but had to wait until the 1965 Act before the machinery could be set up. It is not possible to remove all the anomalies at once, but we shall certainly bear in mind my hon. Friend's point.

Mr. Hunter: I am pleased that my hon. Friend is considering bringing more controlled houses into the rent regulation scheme. I hope that he will keep in mind that many property owners with one or two small houses to let are suffering great hardship. Does he agree that an annual rent of £10 3s. for an assessed rental value of £57 is far too low, and that relief should be given to the landlords concerned and money granted to them to allow them to pay for repairs and meet other expenses?

Dr. Mabon: I accept that my hon. Friend's example is remarkable, but, alas, it is repeated in several places throughout Scotland. We had to take this in two stages and only began the process in


March, 1966. Both my hon. Friends will agree that we are getting the priority right, namely, dealing first with regulated tenancies and then with the controlled tenancies. We are getting on as quickly as we can.

Mr. Bruce-Gardyne: Would not the Minister agree, judging from the complaints I have sent him from constituents, that landlords of controlled tenants who are getting a rent of £4 a year are in an intolerable position of injustice, and that something should be done about it as a matter of urgency?

Dr. Mabon: As the hon. Gentleman knows, we are dealing with the matter as speedily as we can—I hope a little more speedily than the hon. Gentleman was on this occasion in arriving to put his supplementary question. It is a great pity that we did not have a fair and sensible rent policy, and machinery to go with it, until 1965. That is my criticism, which I think is fair and must be recognised.

Maladjusted Children (Residential Schools)

Mr. Dewar: asked the Secretary of State for Scotland how many residential places are provided in Scotland for maladjusted children; and what plans he has for expanding this number.

The Under-Secretary of State for Scotland (Mr. Bruce Milan): One hundred and ninety-two places are provided in residential schools for maladjusted children managed by education authorities and grant-aided voluntary bodies. Projects now in hand and proposed should double this number over the next few years.

Mr. Dewar: Will my hon. Friend accept that this will give a great deal of satisfaction in view of the very slow growth in the 1960s? Can he assure the House that the targets set out by the working party which was set up by his Department in 1964 are now likely to be met?

Mr. Millan: Certainly. There were two working parties and their conclusions were drawn to the attention of local authorities as far back as December, 1965.

The Earl of Dalkeith: When does the Minister hope to be able to follow up with legislation the White Paper, Social Work and the Community, in view of the bearing it has on this question?

Mr. Millan: Perhaps the hon. Gentleman will put that down as a Question, because it is quite separate from the Question on the Order Paper.

Asbestosis (Deaths)

Dr. Miller: asked the Secretary of State for Scotland how many deaths have occurred in Scotland certifiable as due to asbestosis in each of the last five years.

Mr. Milan: In the five years 1962 to 1966, five deaths in Scotland were certified as due to asbestosis: two in 1963, two in 1965 and one in 1966. There were also two cases in 1963 and one in 1965 in which the medical certificate indicated that asbestosis was a contributory or secondary cause of death.

Dr. Miller: I thank the Minister for his reply, but is he aware of the considerable concern caused among men who work with asbestos in any form because of morbidity statistics? Since asbestos clings to garments and is inhaled into the lungs, will he undertake to push for protective clothing, shower and locker facilities and full medical check-ups—not just X-rays—for the men concerned?

Mr. Millan: Asbestosis is a scheduled industrial disease, and preventive action of the kind my hon. Friend mentioned is really a matter for the Minister of Labour. I shall draw the attention of the Minister to my hon. Friend's remarks.

Forth Road Bridge (Tolls)

Mr. G. Campbell: asked the Secretary of State for Scotland whether he will make a statement on the future of tolls at the Forth Road Bridge.

Dr. Dickson Mabon: My right hon. Friend is examining the future level of tolls with the Joint Board.

Mr. Campbell: Is it the Government's policy to continue in principle a system of tolls on the bridge?

Dr. Mabon: We had better wait until the review is completed and see what is what.

Mr. Eadie: Is my hon. Friend aware that this financial problem was inherited from hon. Members opposite? Is he aware that it cost more to construct the approach roads than to build the bridge, and that the Joint Board is paying interest upon interest?

Dr. Mahon: The answer to the first part of my hon. Friend's question is "Yes". I think, off the cuff, that the answer to the second part on the cost is "Yes", and the answer to the third part is also "Yes". We certainly want to discuss these matters with the Joint Board, and agreed that we would have a realistic review based on the experience of at least two full years' traffic. My hon. Friend is right to say that we inherited the problem.

Mr. Noble: In what sense does the Minister mean that he inherited the problem? In the first year the tolls were fixed by a statutory device in which we had no control.

Dr. Mabon: I am sorry, but the right hon. Gentleman had better look again at the procedure. He will see that the provisions are pretty firm. There are certain options within them and the one referred to by my hon. Friend was assented to quite recently. These are matters for further discussion. As I have said, we may have had to wait until there has been a full two years' use before we can make further decisions.

Mr. Woodburn: Is my hon. Friend suggesting that contrary to hon. Members' expectation that the tolls might be abolished, the review might result in an increase? I hope not. [HON MEMBERS: "Answer."]

Council House Allocation (Scottish Housing Advisory Committee's Report)

Mr. G. Campbell: asked the Secretary of State for Scotland what is his policy regarding the conclusion in Chapter 2 of the Report on allocating council houses of the sub-committee of the Scottish Housing Advisory Committee in favour of group-plus-points schemes.

Mr. Eadie: asked the Secretary of State for Scotland if he will make a statement on the Report by a subcommittee of the Scottish Housing

Advisory Committee on allocating council houses.

Mr. Younger: asked the Secretary of State for Scotland whether he will now implement in full the recommendations of the Report of the Sub-Committee on Allocation of Council Tenancies; and if he will make a statement.

Dr. Dickson Mabon: My right hon. Friend has sent copies of the Report to all local housing authorities and has asked them for their views. He wants to consider their comments and discuss them with the local authority associations before coming to any conclusions.

Mr. Campbell: Will the Minister give the consideration of the Report very high priority since its subject, the allocation of council houses, is the cause of much frustration and misunderstanding in Scotland?

Dr. Mabon: Yes, Sir. The hon. Gentleman will remember that the Housing Advisory Committee intends to look at the evidence and representations made to it on the Cullingworth Report which, with all respect, I think takes precedence over this Report. That will be done at the October meeting. I hope that thereafter it will be able to get the views of others on the Kay Report, which is just as important, at least on the needs of housing management. It will take some time to get these matters settled and recommendations made to my right hon. Friend the Secretary of State. It is a great pity that the 1949 Report was neglected for so long.

Mr. Eadie: Is my hon. Friend aware that many of us on this side of the House think that this is a good Report and hope that it does not become dust covered on a shelf? Is he aware that, in my constituency, engaged couples are writing to me in the hope that, as a consequence of the Report, they will be considered for housing allocation?

Dr. Mabon: I would not like to answer the latter part of that supplementary question without seeing more evidence and discussing it with my right hon. Friend. The Report is certainly important in terms of the mobility of labour. The Government recognise that the problem must be tackled vigorously in the near future.

Mr. Younger: Has my hon. Friend considered the possibility of a national points scheme, which would help mobility considerably because everyone in different parts of the country would be able to assess their points standing on an equal basis?

Dr. Mabon: That is what might be called the 64,000 dollar question. While the Committee recommended that there should be some kind of uniformity such as that suggested in the Question on the Order Paper, its Report allowed for more than one model scheme to take account of different classes of authority and local variations from the model. I do not know whether we can take this and the next stage in one. Perhaps we shall have to take the matter in two parts.

Forestry (Private Woodland Owners)

Mr. Brewis: asked the Secretary of State for Scotland how many acres were planted by private forestry interests in 1966 and in the current forest year.

Dr. Dickson Mabon: In 1966 private woodland owners planted 30,837 acres with the aid of grants from the Forestry Commission. The Commission estimates that a further 1,200 acres were planted without grants.
I regret that figures for planting to date in the current year are not yet available.

Mr. Brewis: Will the hon. Gentleman bear in mind the considerable drop in timber prices? Will he seek to keep up the confidence of the private woodland owners by perhaps reviewing the grant structure?

Dr. Mabon: I will certainly bear it in mind, but I understand that there is no sign of falling off in private planting as a consequence of economic change in the industry. Better times may be round the corner.

Sir J. Gilmour: Will the hon. Gentleman consider active steps to assist the disposal of thinnings? If woodland thinnings are not disposed of, it will discourage people from planting.

Dr. Mabon: I understand that the Forestry Commission has been discussing this question with the industry energetically in the last few weeks.

Prisoners (Good Conduct Remission)

Mr. Brewis: asked the Secretary of State for Scotland why prisoners in Scotland who have earned remission of their sentences by good conduct may not be released on licence on such favourable terms as in England; and whether he will take steps to arrange for Scottish prisoners so affected to be transferred to England.

The Under-Secretary of State for Scotland (Mr. Norman Buchan): I know of no such distinction. Both in Scotland and in England and Wales prisoners may earn remission of up to one-third of their sentences.

Mr. Brewis: Surely Scotland is excluded from the recent Criminal Justice Bill?

Mr. Buchan: It would be wrong of me to comment on a Bill which is now under discussion in another place, but perhaps it would be proper for me to recommend the hon. Gentleman to look at the proceedings.

Fishing Industry (Co-operative Schemes)

Mr. Buchanan-Smith: asked the Secretary of State for Scotland what facilities are available to encourage co-operative working amongst fishermen.

Mr. Buchan: The White Fish Authority and the Herring Industry Board have power to give financial or other assistance to new or existing co-operative organisations in the fishing industry. My right hon. Friend and my right hon. Friend the Minister of Agriculture, Fisheries and Food also may make loans towards the capital expenditure incurred in starting or developing a co-operative scheme.

Mr. Buchanan-Smith: Is the hon. Gentleman aware that at Gourdon in my constituency the Fishermen's Co-operative Association is having to pay Selective Employment Tax without getting a refund? Is it not a nonsensical farce to encourage co-operation on the one hand and penalise it on the other?

Mr. Buchan: The levying of the tax was connected with the staff involved, but


in terms of the other aspects of the Question we are giving all the assistance that co-operative schemes require.

Mr. Noble: Will the hon. Gentleman look carefully at this and perhaps similar cases, because it seems a great pity that, where co-operative fishing of this sort is successful, it should be penalised just because an association has one or two extra staff who look after the co-operative side?

Mr. Buchan: We look at all these aspects carefully. I remind the right hon. Gentleman that out of £65,000 given to co-operative schemes over the last five years in the United Kingdom, £24,000 was given to four co-operatives in Scotland.

Car Treasure Hunts

Mr. Buchanan-Smith: asked the Secretary of State for Scotland what representations he has received regarding the conduct of car treasure hunts organised in aid of local charities; if he will relax his regulations on this matter; and if he will make a statement.

Dr. Mabon: The only representations my right hon. Friend has received have been from the hon. Gentleman himself and concurrently from the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon). My right hon. Friend proposes to keep under review, with advice from the Motor Rallies Advisory Committee, the possibility of relaxing the regulations.

Mr. Buchanan-Smith: Will the hon. Gentleman bear in mind that the conditions necessary to control car treasure hunts in the urban south do not necessarily apply to rural areas in Scotland? Does not he admit that the present Regulations are a totally unjustified imposition on local charities and, indeed, on a lot of innocent pleasure in these areas? Will he do something to relax them?

Dr. Mabon: These points are bound to be taken up by the four very distinguished Scottish Members who serve on the Motor Rallies Advisory Committee when they are being put not only to my right hon. Friend the Minister of Transport but also to my right hon. Friends the Secretary of State for Wales and the Secretary of State for Scotland.

Huntly Jubilee Hospital (Nurses Training School)

Mr. James Davidson: asked the Secretary of State for Scotland if he will give an assurance that the nurses training school at Huntly Jubilee Hospital will be continued.

Mr. Millan: Practical training of pupil nurses will continue at the Huntly Jubilee Hospital. Proposals about their classroom instruction are still under consideration by the hospital authorities.

Mr. Davidson: I thank the hon. Gentleman for that assurance, but will he bear in mind the tremendous assset that the nurses' school is to the Burgh of Huntly and the very high standard of entrants the Burgh manages to maintain? I hope that stress will be given to maintaining the good work of the school.

Mr. Millan: I am sure we want to do that but, even if a change were made in terms of time, much the greater part of the instruction would still be done locally. Quite a small part only would go to Banff.

Insch School (Secondary Department)

Mr. James Davidson: asked the Secretary of State for Scotland if he will given an assurance that the secondary department of Insch School will remain open.

Mr. Millan: My right hon. Friend has asked the education authority to consider further the future of the secondary department at Insch, and he is awaiting its reply.

Mr. Davidson: What prospect is there of the upgrading of this school to being a six-year comprehensive school in view of the rise in population of the village of Insch and the considerable distance to the nearest senior secondary school? Indeed, this school is equally distant from two major senior secondary schools.

Mr. Millan: I should have thought that the prospect of upgrading to six-year comprehensive is quite small when one considers that the roll at the moment is only about 100. The point at issue now is whether the school should continue as a junior high school which would provide a four-year education.

Teachers (Travelling Expenses)

Mr. Hugh D. Brown: asked the Secretary of State for Scotland how many local authorities make payments to teachers for travelling expenses.

The Secretary of State for Scotland (Mr. William Ross): I understand that some authorities make such payments but I have no complete information.

Mr. Brown: Would not my right hon. Friend agree that there must be some doubt about who has powers to do what and whether additional cost attracts grant? In view of this lack of information, will he consider circularising all local authorities, particularly those with a known teacher shortage, explaining in detail the powers they have or do not have?

Mr. Ross: There is no doubt about it. This is covered by the Incidental Expenses (Scotland) Regulations, 1959, which empower an education authority to incur reasonable expenditure in meeting the cost of travelling and other expenses necessarily incurred by a teacher with the approval of the authority in the performance or for the purpose of his functions as a teacher. It is up to the education authorities to consider to what extent this should apply. They would be able to defray a teacher's expenses in respect of travel between home and school.

Part-time Education

Mr. Hugh D. Brown: asked the Secretary of State for Scotland, how many children are receiving part-time education; which authorities are involved; and how many children, primary and secondary, in such authorities' areas are affected.

Mr. Ross: At mid-June 3,189 children: 1,949 primary and 228 secondary pupils in Glasgow, 819 secondary pupils in Dunbartonshire and 193 secondary pupils in Renfrewshire.

Mr. Brown: Does not my right hon. Friend agree that, even though the information reveals a serious position in Glasgow, it does not set out the whole story in that uncertificated teachers are finding themselves in greater proportion

to the total staff in unpopular areas? Is there not need for a serious examination of the factual situation in relation to the comparative overstaffing in some schools in other areas so that we may know the true position?

Mr. Ross: Of course we could look at the whole question of the distribution of teachers not just in Scotland as a whole but within areas of Glasgow itself. I agree that this information gives no indication of the real shortage of certificated teachers but this matter is already being looked at, as my hon. Friend knows.

Mr. Brewis: Would it not be much better to try and get teachers to settle in these difficult areas by implementing the Roberts Report rather than playing around by giving travel allowances to cover distances?

Mr. Ross: I remind the hon. Gentleman that travel allowances were part of the Roberts Report.

Regional Crime Squad

Mr. Dempsey: asked the Secretary of State for Scotland if, in view of the success of the Crime Squad operating in a limited area in Central Scotland, he will now, after consultations with the chief constables, take steps to establish a Regional Crime Squad to cover Scotland as a whole.

Mr. Ross: Yes, Sir. I have this proposal in hand.

Mr. Dempsey: Will my right hon. Friend say that he will do his utmost to expedite these matters, because at the present time the modern criminal has no parochial boundaries and is highly specialised? Will he do his utmost to secure a Scotland Yard for Scotland to match the techniques of these criminals?

Mr. Ross: My hon. Friend should appreciate that the decision to examine the proposal, which is proceeding very well and quickly, arises because we have three existing area squads. The first covers Glasgow and the Clyde Valley, the second Edinburgh and the South-East, and the third Tayside. It is because of the success of these that we have decided we should go further.

Peel Hospital (Replacement)

Mr. David Steel: asked the Secretary of State for Scotland whether he will ensure that in the next hospital building programme a new general hospital in the Borders will be included to replace Peel Hospital and to ensure an adequate improvement in medical services to meet the needs of the programme of Border development.

Mr. Millan: The content of the hospital building programme for the period after 1970–71 has still to be determined. But, whether or not the programme includes a new general hospital to replace Peel, medical services will be kept at a sufficiently high level to meet the needs arising from development in the Borders.

Mr. David Steel: Is the Under-Secretary aware that that Answer is not wholly encouraging? It is essential that the Scottish Office, in undertaking this programme of development, should stipulate that a new hospital must be part and parcel of that development.

Mr. Millan: As the hon. Gentleman knows, it is accepted that the hospital will have to be replaced at some time. What I am not able to give him at the moment is a precise date for it. He also knows that this will be considered in relation to economic development in the Borders.

Rate Burden

Mr. David Steel: asked the Secretary of State for Scotland whether, in advance of the report of the Royal Commission on Local Government, he will bring forward proposals for transferring some of the rate burden to the central Exchequer.

Mr. Ross: The Government have already introduced the new rate support grant system under which the Exchequer will bear a rising percentage of total local expenditure year by year, and a progressively increasing part of this central assistance is earmarked for domestic ratepayers.

Mr. Steel: Does not the Secretary of State think that there is further scope for ending the tremendous burden on rates, particularly in the matter of teachers' salaries? Would it not be preferable

to transfer more of that from the rate burden to the central Exchequer?

Mr. Ross: We went into this when we issued our White Paper on local government finance. We could not accept the justice of it without considering the question of responsibility. In other words, we should not make a change based purely on finances without having regard to responsibility. The better time to consider the viability of areas and changes in financing local government will be after we receive the Royal Commission's Report.

Mr. Galbraith: Would not a very simple way to help local ratepayers be to adjust local authority rents upwards which in Glasgow are costing ratepayers £7 million a year, which is 5s. in the £?

Mr. Ross: There are all sorts of ways of doing it. Some of them may create even more hardship. The hon. Gentleman should appreciate that many things are being done in this respect even by the local authorities.

Mr. Thomas Steele: Is my right hon. Friend aware that the Burgh of Dumbarton has announced a decrease in rates of 2s. 3d. in the £ because of the help and assistance of the Labour Government?

Mr. Ross: I am sure that it is not alone in recognising the generosity and beneficial effects of the present Administration.

Mr. Baker: Can the right hon. Gentleman confirm, in the light of a previous reply, that the Royal Commission for Scotland will be reporting in the autumn of next year?

Mr. Ross: It would be wrong for me to say that it will report in the autumn of next year. We can only give a general indication that it will probably be late next year or early the year after. However, it would be wrong for me to tie it down to a date.

Employment Changes (Service and Manufacturing Industries)

Mr. MacArthur: asked the Secretary of State for Scotland what study he has made of the movement of employees from service to manufacturing industries in Scotland.

Mr. Ross: Information about changes in employment in all industries, compiled by the Ministry of Labour, is published regularly in the Digest of Scottish Statistics.

Mr. MacArthur: As the right hon. Gentleman well knows, that is not a very helpful reply. Is he not aware that one of the primary purposes of the Selective Employment Tax was to switch employees from service to manufacturing industries? Would he not accept that this silly tax makes no sense in the Highlands of Scotland where only 10 per cent. of employees are engaged in the manufacturing industry? The economic strength of the Highlands lies in tourism, agriculture and the service industries which are constantly and increasingly being penalised by this Government.

Mr. Ross: There is no indication, from what we already know, that the tourist industry in the Highlands is being destroyed because of this tax. The hon. Gentleman should appreciate that the primary purpose of S.E.T. was to raise revenue. If it had not been done in this way it would have been done in another.

Mr. Russell Johnston: Has the Secretary of State requested or received any representations from the Highlands and Islands Development Board about the effect of S.E.T. on its work?

Mr. Ross: Not on its work. We have no indications and we cannot have any indications because Selective Employment Tax began in September last year and a great number of the tourist facilities in the Highlands close down then till early spring. Therefore, it is too early to assess its effect.

Mr. Manuel: Is my right hon. Friend aware, in connection with the tourist industry, that information to hand shows full bookings for the whole of the summer? Many small Highlands hotels are already fully booked and people are going fom home to home trying to obtain bed and breakfast, even now.

Mr. Ross: This is true. All the indications are that the tourist industry in the Highlands is prospering. Indeed, one wonders what hon. Gentlemen opposite are grousing about when one remembers that they were proposing to put a tax

on every bed for every night in every hotel and boarding house in the Highlands. They have now changed their minds about it, but that was their intention.

Mr. Noble: No one has ever said that the Selective Employment Tax was destroying the tourist industry. However, it has added a very great burden and there are many parts of the tourist industry—restaurants and hotels—which do not have a lot of beds but have to pay considerable tax and perhaps have to increase charges to the detriment of the area.

Mr. Ross: I do not know how it is to the detriment of the area if the tourist industry is flourishing more than ever.

Mr. Noble: It is clearly to the detriment of an area like the Highlands if it has to put up its charges merely in order to cover the tax.

Mr. Ross: Only if it has a detrimental effect on the industry, and there is no indication that it has. The right hon. Gentleman must have had this in mind when he himself was the architect of the bed tax for Scotland.

School Building Projects

Mr. MacArthur: asked the Secretary of State for Scotland what was the total value of school building projects started in each of the years 1964, 1965 and 1966; and what estimate he has made for 1967.

Mr. Millan: For the answer to the first part of his Question, I would refer the hon. Gentleman to Table A on page 61 of "Education in Scotland in 1966" (Cmnd. 3216). The allocations would enable education authorities in the calendar year 1967 to start schools to the value of about £24 million. Towards this, projects to the value of £12 million were started in the first four months.

Mr. MacArthur: Is the hon. Gentleman aware that there has been a steady and disturbing fall in the number of starts over the last two or three years? Is he aware that the number of school buildings under construction at the end of 1966 was £2½ million worth less than the previous year and £4 million and more less than in 1964? Is he aware that projects started and completed and work done last year have fallen substantially?

Mr. Speaker: Questions must be reasonably brief even from the Front Bench.

Mr. MacArthur: If I may finish my question—when will the impact of these increased allocations be seen in the figures of work done?

Mr. Millan: The impact is being seen in the figures which I quoted for the first few months of the current year. The figures for approvals in 1966–67, compared with the previous year, were up by nearly 100 per cent., so the programme is picking up quite considerably.

Children (Ascertainment of Deafness)

Mr. Hannan: asked the Secretary of State for Scotland what plans he has for imp roving the ascertainment of deafness of children.

Mr. Millan: My hon. Friend will be aware of the recently published report of the working party which studied this problem in detail. It makes a number of important recommendations, and these my right hon. Friend will be considering in the light of the views of the local authority associations and other interested bodies.

Mr. Hannan: My hon. Friend will recall that paragraph 45 of the report speaks of education authorities' powers going down to only age 2 for early ascertainment of deafness in children and suggests an amendment of the law. Will he give even earlier consideration to that and try to introduce legislation on this subject?

Mr. Millan: This is one of the very important recommendations which we are now discussing with the authorities. It is certainly one of the matters which we have very much in mind.

Dr. Miller: Is my hon. Friend aware that backwardness in children is sometimes diagnosed when it is deafness which is wrong with a child, so that it is absolutely essential that early diagnosis is made in cases of this kind? Will he push this with the utmost vigour?

Mr. Millan: Certainly. The working party directed its attention and recommendations towards that.

Alcoholics (Admissions to Mental Hospitals)

Mr. Hannan: asked the Secretary of State for Scotland how many patients suffering from alcoholism or alcoholic neurosis were admitted to mental hospitals in 1956, 1961 and 1966; and what proportion of the total bed accommodation such patients occupied in those hospitals.

Mr. Millan: The numbers admitted were 732, 1,350 and 2,755, respectively, which constituted 7·1 per cent., 9·9 per cent. and 13·6 per cent. of the total admissions to such hospitals. For 1966 these figures include admissions to psychiatric wards in general hospitals. I regret that figures are not available for the proportion of total bed accommodation in these hospitals occupied by alcoholic patients. On average, however, their length of stay is shorter than that of other patients in these hospitals.

Mr. Hannan: Is my hon. Friend aware that the rate of readmissions of such patients is very much higher than with usual mental patients, if one can use that term? In view of these very disturbing figures, will my hon. Friend consider asking the Interdepartmental Committee on Drug Addiction to include alcoholism among its considerations? As the purveyors of this article, the pedlars and pushers, are known and licensed, cannot my hon. Friend ensure that before public money is used to provide treatment for such patients the pedlars and pushers will make a contribution?

Mr. Speaker: Questions should be reasonably brief. There are many Scottish Questions today.

Mr. Millan: I do not think that my hon. Friend's suggestion is practicable. We have asked regional boards to pay particular attention to this matter and to set up special units to deal with the problem. Some of these special units are already being established.

Slum Clearance

Mr. William Hamilton: asked the Secretary of State for Scotland how many slum houses are expected to be demolished in the current calendar year;


and how many new houses are expected to be built.

Dr. Dickson Mahon: While my right hon. Friend cannot make precise forecasts, he has every hope that the 30 per cent. increase in the rate of slum clearance since 1964 will continue, and figures for new house-building so far this year show an improvement over 1966.

Mr. Hamilton: Can my hon. Friend confirm that the slum clearance figures are an all-time record, but that nevertheless there are more slums in Scotland than was thought and that therefore the programme must be expedited? Can he say by what percentage there will be an increase in completions over the average of 27,000 in the three years 1961 to 1963?

Dr. Mahon: In the three calendar years 1962, 1963 and 1964, 38,500 slums were dealt with. We hope that in the three calendar years 1965, 1966 and 1967 we will deal with another 45.000 slums. At the moment we have cleared or demolished 32,184, which means that we are 30 per cent. ahead of the previous three years rate. I cannot give precise figures for completions, as we do not have the private sector figures available till the end of this month, but I can say that 14,000 houses have been completed this year compared with 13,100 this time last year, and that 17,900 have been started as against 13,000 last year.

New Towns (Rents)

Mr. William Hamilton: asked the Secretary of State for Scotland if he is aware that the present rents in new towns are generally in excess of gross annual values, that the proposed new rents will be even more so, and that average local authority housing rents are in general below gross annual value; and what steps he intends to take to remove this anomaly.

Dr. Dickson Mabon: I agree that the facts are as stated by my hon. Friend. If there is an anomaly it is not for my right hon. Friend to remove it. I would point out, however, that since the Valuation and Rating (Scotland) Act, 1956, there has been no essential direct relationship between the rent actually passing for any house and its gross annual value for rating purposes.

Mr. Hamilton: Does the Scottish Office have in mind any figure for the relationship between gross annual value and rent? There seems to be considerable misunderstanding about this matter among tenants.

Dr. Mabon: I agree that housing economics are complicated and require a great deal of exploration, but my hon. Friend will remember from the memorandum to the Rate Support Grant Order what the Government's attitude is towards notional rents for calculations of G.A.V. in local authority areas. Our rent policy in the private sector is clear from the Rent Act, 1965. There are no ratepayers for new town development corporations who have to take the Exchequer grants as they are.

Mr. Bruce-Gardyne: Would not the hon. Gentleman agree that the best contribution to the solution of the housing problem in Scotland generally may be a move towards more economic rents?

Dr. Mabon: That is not the only factor. The great tragedy of the party opposite is that it is transfixed by that as being the only solution.

School Dentists (Ayrshire)

Mr. Manuel: asked the Secretary of State for Scotland how many school dentists are employed in Ayrshire; and how many would be needed to give each child attending school a yearly examination.

Mr. Millan: Thirteen dentists were employed in May, 1967. It is estimated that not less than 20 would be required to provide an entirely satisfactory service.

Mr. Manuel: I thank my hon. Friend for that reply. Does it reflect the general trend in Scotland? If so, what do my hon. Friend and his right hon. Friend intend to do to ensure that children's teeth get the supporting care and attention which they require?

Mr. Millan: There are shortages elsewhere, but the figures for Scotland as a whole have improved considerably over the last four or five years. The figures for Ayrshire have improved from 10 a year ago to 13 now.

Mr. MacArthur: What are the criteria for a satisfactory service? How many examinations a year are represented.

Mr. Millan: One dentist for every 3,000 school children is considered to be a satisfactory ratio.

Health Centres (Ayrshire)

Mr. Manuel: asked the Secretary of State for Scotland what action he is taking to provide adequate health centres in Ayrshire.

Mr. Millan: My right hon. Friend is always ready, within the limits of our resources, to consider proposals for providing health centres where the local conditions are favourable; and he proposes to consider, in consultation with the interested parties, the possibility of providing health centres in Irvine new town and in association with the new district general hospital planned for North Ayrshire.

Mr. Manuel: I welcome that statement and I know that it will be appreciated throughout Ayrshire, not only in the centres which my hon. Friend mentioned. It is extremely important that health centres should be more numerous and I hope that this trend will be continued.

Mr. Millan: That is also my hope, but a great deal depends on local initiative. Where there is the local initiative, we are always willing to give whatever help we can.

Mr. Speaker: There was nothing to answer then.

Mr. Millan: That often happens, Mr. Speaker.

Woodside Health Centre

Mr. Carmichael: asked the Secretary of State for Scotland if he is satisfied that the schedule of accommodation agreed with the interested organisations involved in the planning of the Woodside Health Centre includes the accommodation which will be required for community social workers when legislation implementing the White Paper, Command Paper No. 3065, is introduced; and if he will take steps to provide for expansion to meet future community needs.

Mr. Millan: My right hon. Friend has arranged for the question of accommodating

social workers in the Woodside Health Centre to be discussed with the Corporation along with other aspects of health centre provision; and regard will certainly be given to the need for future expansion.

Mr. Carmichael: Is my hon. Friend aware that that answer will be very much appreciated, because there was always a danger that there would not be the necessary accommodation for social workers in the health centre, thus destroying the whole purpose of having a health centre and community workers all in the one area to provide a local base from which to work?

Mr. Millan: Certainly there will be accommodation. At least three rooms will be set aside for social work purposes.

Mr. Carmichael: asked the Secretary of State for Scotland if he will include in the staff complement of the Woodside Health Centre a research worker, such as a sociologist, for the first six months.

Mr. Millan: The Department of Public Health and Social Medicine of Glasgow University is proposing to establish a medical research unit in the health centre. It is intended that this unit will study, among other things, the sociological aspects of disease and ill-health in the community, and I understand that it is hoped that the staff of the unit will include a sociologist.

Teachers (Supply)

Mr. Edward M. Taylor: asked the Secretary of State for Scotland what steps he is now taking to deal with the shortage of teachers, particularly in Glasgow.

Mr. Ross: In the course of a full exchange of views with representatives of the education authority on 16th June, I indicated the progress that was being made in improving the supply of teachers generally, and suggested a number of measures which the authority might-itself consider taking to improve the position in those schools where staffing is most difficult.

Mr. Taylor: Is the Secretary of State not aware that Glasgow has one-fifth of the school population of Scotland, but has one-third of the teacher shortage and


two-thirds of those children on part-time education? Is he not ashamed of himself for having sat on the Roberts Committee's Report for over a year? Is he really surprised that the Glasgow Corporation should have deplored his inaction? When are we to have some action?

Mr. Ross: One of the troubles with the hon. Gentleman is that he does race on. We have had this position in Glasgow for a very long time. He will appreciate that the problem in respect of the Roberts Report is not as easy and simple as he suggests. He will remember that in 1963 his own party, then the Government, passed regulations to deal with this and they were thrown out by the teachers because they applied only to Glasgow. The teacher shortage is not purely a Glasgow problem. What we are dealing with in that respect is the failure in the past to get an increasing number of people to enter the teaching profession.
The hon. Gentleman will be glad to know that in the past four years the numbers entering the teaching profession have increased from 2,409 a year to 3,051 and that by 1970 we expect it to rise to 4,700.

Mr. Manuel: Shot down again!

Mr. Woodburn: Would the right hon. Gentleman give us some idea as to how far closed-circuit television, which I gather has been a great success, is helping to solve this problem in Glasgow?

Mr. Ross: It helps to improve the learning of children, but does not do away with the need for the good teacher. It merely helps the teacher but does not replace him. We have introduced a three-year diploma course for men, gone on with the special recruitment scheme, with very considerable success, made improvements to bring married women back and expanded the training colleges. This shows that we have not been inactive.

Mr. Younger: Is the Secretary of State trying to make us believe that the teaching profession would not now accept the implementation of the Roberts Report? Why has he sat on this for so long?

Mr. Ross: I have not sat on it at all. The hon. Gentleman should know that we have been discussing this with the people who have to administer it and implement it. He should not take it for

granted that there is unanimous support for this—far from it.

Mr. Dalyell: Is it premature to comment on the progress of the three-year diploma course for men, particularly in relation to those who are likely to teach in Roman Catholic schools, where there is, perhaps, the greatest shortage?

Mr. Ross: We are only starting in the next session, but it is interesting to know that we have had 500 applicants.

Municipal Community Centres

Mr. Edward M. Taylor: asked the Secretary of State for Scotland if he will state the numbers of municipal community centres completed, approved and started in each of the years 1966, 1965 and 1964; and if he will estimate the numbers of such projects which will be started in 1967.

Mr. Millan: My right hon. Friend's approval is required only for education authority centres and for centres provided by other local authorities which cost over £10,000.
In 1964, 15 such centres were approved in principle, nine were started and two were completed. The corresponding figures for 1965 were eight, six and seven and for 1966 three, six and four. Nine education authority projects are expected to start during 1967.
In addition, many new schools include community facilities.

Mr. Taylor: Would the Minister agree that many of our newer housing schemes are just housing deserts without proper amenities? Is he not a little worried by this decline?

Mr. Millan: I do not think that the figures are declining. There is one starting in Castlemilk in Glasgow this year which will interest the hon. Gentleman. This has to be taken in relation to the provision of other facilities, for example youth centres, for which there is now a programme of six in Glasgow.

New Towns (Housing Valuations)

Mr. Eadie: asked the Secretary of State for Scotland what recent discussions he has had with valuation assessors about new town valuations for houses.

Dr. Dickson Mabon: None, Sir.

Mr. Eadie: Is my hon. Friend aware that allegations have been made that under the rate structure for new towns there will be higher valuations, because assessors take into consideration the hypothetical rents charged in making assessments? Does he not think that this is grossly unfair to tenants of new towns, if they are to be charged higher rates than tenants in surrounding burghs and counties? Does he not think that this is a case for having a meeting with the assessors?

Mr. Speaker: Order. Questions and Answers must be reasonably brief. Many hon. Members wish to ask Questions.

Dr. Mabon: No, Sir. It would not be proper. The Secretary of State has no power to intervene in the statutory process of valuation for rating. That is as a result of the Act of 1956, passed by the previous Administration, which was to last 100 years. The valuations for rating are not now based on the actual rent passing, but on the rent which would be appropriate, assuming no shortage or surplus of houses. I can only say to my hon. Friend that until such time as we amend the Act, the position will be as laid down.

Dumfries Inner Ring Road

Mr. Monro: asked the Secretary of State for Scotland when he proposes to authorise the construction of the Dumfries inner ring road.

Dr. Dickson Mabon: Under the Local Government (Scotland) Act, 1966, it is for the Dumfries Town Council to decide when to construct it.

Mr. Monro: Will the hon. Gentleman accept that this is a most disappointing Answer, because it is a main trunk road and the town centre is becoming a bottleneck which deserves high priority from the Government?

Dr. Mabon: As the hon. Gentleman knows from correspondence with me, if we had not changed the system, it would have been a Class 2 road, and would not have had a very high priority. Now the local authorities have freedom to decide if they want to construct these projects out of the Rate Support Grant, and an allowance is made for that. I am glad that Dumfries has accepted our invitation

to do a road traffic survey in the town, with a view to trying to investigate the traffic problem, which will allow the town council and ourselves to see whether the priority for this is as it is said to be.

Unemployment

Mr. Monro: asked the Secretary of State for Scotland if the Scottish Economic Planning Council has reported to him on the unemployment problems of south-west Scotland.

Mr. Ross: Yes, Sir. The Council keeps me very fully informed about the special problems of all the regions of Scotland.

Mr. Monro: Does the Secretary of State realise that unemployment in my constituency has risen by almost 40 per cent. in 12 months? When will the Government stop their foolish economic policies?

Mr. Ross: The hon. Gentleman will appreciate, and those concerned in his constituency, will appreciate, that this problem is long-standing. His constituents are terrified in case the same thing happens as happened there in the past, under a Conservative Government.

Mr. Steele: Would my hon. and right hon. Friend inform the House what is his relationship with the Chairman of the Scottish Economic Planning Council?

Mr. Ross: It is very, very close indeed.

Mr. Bruce-Gardyne: asked the Secretary of State for Scotland if he will instruct the Scottish Development Department to undertake, as a matter of urgency, a study of the levels of unemployment to be expected in Scotland in the first quarter of 1968, and of the extent of the fall in manufacturing investment in Scotland, in 1967 and 1968.

Mr. Ross: My Department, in consultation with the Ministry of Labour and other Government Departments concerned, already gives consideration to current and prospective levels of unemployment in Scotland.
Similarly the investment intentions of manufacturing firms, in so far as they are reflected in issues of industrial development certificates, are also kept under regular review.

Mr. Bruce-Gardyne: Can the right hon. Gentleman tell us his forecast of the peak level of unemployment in Scotland next spring and what he would regard as a tolerable ceiling?

Mr. Ross: I have to resist the blandishments of the hon. Gentleman. It has never been the practice to disclose forecasts, either by this Administration or previous ones. I have no intention of departing from that wise precedent.

Mr. Younger: Has the Secretary of State observed that the current trends in unemployment seem to indicate a fall of only half of what was expected between last winter and this summer? Does not this give him cause for concern?

Mr. Ross: Any increase in the trend should cause us all concern, but there are encouraging indications. For instance, the latest C.B.I. survey of industrial trends in Scotland indicates that investment has risen since January and that firms are taking a more confident view of the future. This is how we should talk in Scotland.

Geriatric Beds (Fife)

Mr. Adam Hunter: asked the Secretary of State for Scotland what further steps have been taken to add to the number of geriatric beds in Fife hospitals.

Mr. Millan: Over 100 new geriatric beds are being provided in Fife hospitals this year. The Regional Hospital Board plans to provide 180 more by 1972.

Mr. Hunter: While thanking my hon. Friend for that information, may I ask him if he is aware that earlier this year there were over 286 geriatric beds in the county of Fife, and the estimated figure is 600, as approved by my right hon. Friend? Would he not agree that this is a continuing problem which will become progressively worse? Would he give Fife more special attention?

Mr. Millan: It is very much a problem at the moment, but I could not agree with my hon. Friend that it will become worse. When the projects that I have just mentioned are completed, Fife will be up to the accepted level for the rest of the country. Certainly at the moment it is a serious problem.

Egg Production Units

Sir J. Gilmour: asked the Secretary of State for Scotland what plans have been notified to his Department of agriculture for large-scale egg production units in Scotland; whether any Government financial assistance is being asked; and what is the planned output of such units.

Mr. Buchan: It is not the practice to disclose information of this kind in relation to individual cases.

Sir J. Gilmour: Is it not a fact that projects are in hand for increasing egg production in the central belt of Scotland because of grants that are available? This is bound to have the result of putting out of production many egg producers in the counties of Aberdeenshire, Banff and the Orkney Islands?

Mr. Buchan: We are always considering the total egg production, and this is why, in the annual Price Review, we decided to have discussions with the Egg Marketing Board and the unions. No doubt they will be considering the situation.

Sir J. Gilmour: In view of the unsatisfactory nature of that reply, I beg to give notice that I will seek leave to raise this matter on the Adjournment at the earliest possible moment.

Sugar Beet (Acreage)

Sir J. Gilmour: asked the Secretary of State for Scotland what has been the final acreage of sugar beet sown in Scotland this year; how much this acreage differs from the contracted acreage; and how the acreage sown compares with that sown in each of the last two seasons.

Mr. Buchan: The final estimate is 6,798 acres sown, compared with a contracted acreage of 6,785; 7,110 acres were sown in 1966 and 8,968 acres in 1965.

Sir J. Gilmour: Would the hon. Gentleman agree that, in the light of his experience in visiting the field in Fife the other day, and the Cupar factory, it is essential to take some steps in advance of next year's Price Review in order to get the increased acreage of sugar beet to make the factory a viable unit?

Mr. Buchan: The hon. Member must realise that we have taken steps. For example, we have restored the transport subvention which was so viciously cut by the party opposite four years ago, and we have increased by 2s. 6d. the subvention for sugar beet. What the industry now requires is a breathing-space—and it is not always helped by statements made by the hon. Member for Fife, East (Sir J. Gilmour)—in order that it may recover its position and encourage producers.

Mr. Hector Hughes: Does my hon. Friend realise that this small acreage could be and should be greatly increased by the establishment of more sugar beet factories and finding markets for the sugar?

Mr. Buchan: I think that the real task is not so much to establish more sugar factories but to ensure that we fill the sugar factory which we have already.

Mr. Stodart: Now that the hon. Gentleman has mentioned the cut in the subvention, would he say what is the extent of the increased charges falling on growers as a result of the cut in the fertiliser subsidy this year? Would he agree that, in the hope of getting a possible break-through in technical developments for this crop in Scotland, it is very important that nothing should be done to discourage production in the next few years?

Mr. Buchan: I agree very much with the latter half of the hon. Gentleman's supplementary question. I think that that is exactly the point: nothing should be done to discourage production. This is why we are encouraging it in every possible way by positive statements.

Agricultural Tenants (Security of Tenure)

Mr. Russell Johnston: asked the Secretary of State for Scotland whether he is yet able to announce proposals to restore security of tenure to agricultural tenants subject to safeguards regarding husbandry.

Mr. Buchan: A number of proposals relating to agricultural tenancies have been made to my right hon. Friend and are being considered, but he is not yet in a position to make an announcement.

Mr. Johnston: Is the hon. Gentleman aware that many tenants are finding it almost impossible to get their sons on the lease at the moment? Hardship is being caused and on occasion land improvement is being held back. May I hope that the hon. Gentleman will proceed with urgency to examine this question?

Mr. Buchan: We give the hon. Gentleman that assurance. We will do all we can to speed up discussions on the matter. As he knows, there are problems involved.

Pedestrian Crossing (Glasgow)

Mr. Galbraith: asked the Secretary of State for Scotland whether he will authorise the installation of a controlled signal for pedestrians at the junction of Hyndland Road and Clarence Drive, Glasgow.

Dr. Dickson Mabon: My right hon. Friend will take the hon. Gentleman's views into account when considering any application Glasgow Corporation decides to make.

Mr. Galbraith: Is not there something radically wrong with the administrative procedure when local residents have been demanding this for months and nothing has been done? Cannot the hon. Gentleman try to get something done about it?

Dr. Mabon: As the hon. Gentleman knows, this is a matter for the local authority. Because he informed us of his concern several times, we raised it with the City Engineer's Department. We must wait to see what Glasgow proposes.

Local Authority Houses (Building Costs)

Mr. Galbraith: asked the Secretary of State for Scotland if he will place an upper limit on the building cost of local authority houses.

Dr. Dickson Mabon: Consultations are at present taking place with the local authority associations about upper limits of costs which will be accepted for Exchequer subsidy purposes.

Mr. Galbraith: Is not the present situation absolutely absurd when as much as £5,000 can be spent on building luxury flats? Surely the Secretary of State should have a higher sense of responsibility for the homeless and not


allow flats costing as much as £5,000 to be built out of public funds.

Dr. Mabon: I do not know the precise example which the hon. Gentleman is talking about, but if he sends me details I will look into it. I thought that he was talking about the cost limits which we intend to introduce following the new Housing Subsidies Bill. Any cost limit we introduce will allow provision of well-designed houses according to the Scottish Housing Handbook and the Building Standards Regulations. I thought that this was a most commendable way of proceeding and that the hon. Gentleman would give us his support.

Mr. Tom McMillan: Is there not some connection between this Question and the hon. Gentleman's assessment of council house tenants?

Mr. Galbraith: May I just intervene—

Mr. Speaker: Order. There are no special privileges at Question Time, even for back benchers.

40 m.p.h. Speed Limit

Mr. Younger: asked the Secretary of State for Scotland what evidence he has as to how far the introduction of 40 miles-per-hour speed limits in place of 30 miles-per-hour speed limits, reduces the number of accidents; and if he will make a statement.

Dr. Dickson Mabon: Accident records for a sample of roads previously restricted to 30 m.p.h. and now subject to a 40 m.p.h. limit have shown that the change has had little effect.

Mr. Younger: Does not this indicate to the hon. Gentleman that consideration should be given to the often made suggestion that the 30 m.p.h. speed limit is out of date? Have the Government any intention of altering the ordinary practice in this respect?

Dr. Mabon: There is a great deal of feeling, apart from fact, on this matter. That is why the survey was carried out in this manner and has taken some time. It is true that in Scotland the road mileage which is involved in this change is only 74. I agree that that is a very small total, but before we conduct a further review we should wait a little and

take into account some representations coming in on this matter.

Mr. Russell Johnston: When are the results of the 50 m.p.h. limit survey due—very soon, I believe?

Dr. Mabon: That is another matter. I should be glad to answer that question if the hon. Gentleman would table it.

Teacher Training (Ex-Service Men)

Mr. Dalyell: asked the Secretary of State for Scotland what measures he is taking to encourage those who have left Her Majesty's regular forces to take appropriate courses in teacher training.

Mr. Millan: The Special Recruitment Scheme is designed to aid people who are in employment other than teaching to become teachers. The Ministry of Defence and Ministry of Labour hold resettlement interviews for officers and other ranks some time before they leave the Services, and I understand that all suitable applicants are invited to consider training as teachers.

Mr. Dalyell: Is my hon. Friend quite sure that all is being done to help those whose legitimate career expectations are often broken?

Mr. Millan: Certainly. We are in touch with the Ministry of Defence on this subject. We occasionally contribute articles to the Resettlement Bulletin, for example, and we take part in the briefing of the interviewing officers so that the opportunities for careers in teaching are made known to those likely to be interested.

Surplus Service Equipment (Schools)

Mr. Dalyell: asked the Secretary of State for Scotland if he will make a study of the potential use of surplus Royal Air Force equipment in school classes taking technical subjects.

Mr. Millan: Two studies of this kind, not limited to Royal Air Force equipment, are being made in England. The Education Departments in England and Wales and in Scotland have been in touch for some time regarding these and, if a useful and practicable scheme can be evolved, it will include Scotland.

Mr. Dalyell: Does my hon. Friend appreciate the value of what can only be


called "tinkering" with equipment in technical classes? For all the value which the State gets out of a great deal of unused surplus equipment, without going through the difficulties of accounting for it all, could it not be transferred very simply to schools?

Mr. Millan: It is not as simple as all that. I agree that some of the equipment which becomes available might well be used in schools. That is what we are considering at the moment. Colleges of education and the central institutions, for example, already have arrangements with the Ministry of Defence, but it is doubtful whether, without further study, they could be extended just as they are to the schools. That is what we are considering.

Motor Cars (Damage by Cattle)

Mr. Hector Hughes: asked the Secretary of State for Scotland if he is aware that the present law, a statute of 1870, is not sufficient to protect motor cars stationed in public city streets from damage done by cattle being driven along those streets and to provide compensation for damage so done; and if he will take steps t3 bring the laws of Scotland up to date in this respect.

Mr. Buchan: I understand that Aberdeen Corporation is at present reconsidering its local bye-laws concerning cattle-driving in the city, but my right hon. Friend is not aware that the general law on this matter requires modernisation.

Mr. Hughes: Does not my hon. Friend realise that since 1870 primitive self-propelled vehicles have developed into elegant motor cars while primitive cattle have not lost their objections to them? Will he therefore take steps to bring the law up to date?

Mr. Buchan: I have not been able to find the law of 1870, but there is a law of 1878 which refers to what my hon. and learned Friend would call "primitive footpaths". But it does not have much relevance to the problems on the street. An individual case would have to be brought on the question of damage.

Mr. Noble: In looking at this problem, will the hon. Gentleman take care not to do damage to that most useful and

effective breed, the Highland cattle, which are not the primitive cattle native to Aberdeen?

Mr. Buchan: I am sure that my hon. and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes) would treat them with the greatest courtesy should they visit his constituency.

Mr. C. Pannell: As a mere Sassenach, may I offer the observation that it is about time that the Scottish law was brought up to date? What is the point of the Secretary of State for Scotland, answering questions on traffic which would be far more expeditiously and efficiently dealt with by the Ministry of Transport?

Mr. Buchan: It is worth pointing out that the present problem has arisen because of the absence of a relevant provision in United Kingdom legislation. The nearest approach to it was the special Scottish Act affecting footpaths which was passed in 1878. I am sorry that my right hon. Friend has not brought the problem to the attention of some of the Ministers based further south.

Several Hon. Members: rose—

Mr. Speaker: Order. I should not have let a Sassenach in!

ADEN

Mr. Speaker: The Clerk will now proceed to read the Orders of the Day.

Dame Irene Ward: Dame Irene Ward (Tynemouth)
 rose—

Mr. Speaker: Order. I paused to give the hon. Lady her chance. We have passed the stage when she can do what she now seeks to do. However, she may do it.

Dame Irene Ward: Mr. Speaker, I wrote you a very polite little note suggesting that I would wait for you to call me, but perhaps I should not have put it in that form. I am very sorry. I am grateful for your indulgence.

Mr. Speaker: All correspondence between us will remain confidential.

Dame Irene Ward: I beg to ask leave to move the Adjournment of the House,


under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
the recent disturbing military happenings in the Crater area of Aden and all that this implies.
I need not emphasise that this is a definite matter. Public importance attaches to the fact that a full and frank statement should be made about the instructions as to the use of weapons given to the Services in Aden, by whom and when.
Last Monday, in answer to a Question about Aden, the Foreign Secretary said:
I should be very willing to answer on that matter if somebody would wish me to do so."—[OFFICIAL REPORT, 26th June, 1967; Vol. 749, c. 106.]
I wish him to do so, as, apart from other units in the Crater area of Aden, the Royal Northumberland Fusiliers were heavily involved.
In seeking to move the Adjournment, I am giving the Foreign Secretary an opportunity, which I hope he will take, of redeeming his pledge. Pledges on matters of this kind—

Mr. Speaker: The hon. Lady is going into the merits of what she wants to say if her Motion is accepted. She must argue for the Adjournment of the House.

Dame Irene Ward: I suggest merely that the Foreign Secretary might wish to redeem his pledge, or, alternatively, that the Minister of Defence could take his place.
It is rather significant that in this great House of Commons there seems to be no opportunity of dealing with a matter in-

volving men's lives in such disturbing circumstances in Aden. Therefore, I have to take the opportunity of seeking to move the Adjournment of the House. I think that it is important that I should do so, and I look to the Government to redeem the pledges which were given on this matter.

Mr. Speaker: The hon. Lady will bring her Motion to me.

(Copy of Motion handed in.)

The hon. Lady asks leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
the recent disturbing military happenings in the Crater area of Aden and all that this implies.

May I say at the outset that I fully appreciate the hon. Lady's anxiety. It is the anxiety which is shared by every hon. Member of the House about what is happening to British soldiers in Aden. Unfortunately, however, I am bound to observe the rules governing the occasions on which this Standing Order can be invoked. Among the rules governing the acceptance or otherwise of an application under Standing Order No. 9 is that which prescribes that the matter must be raised without delay and that, if the matter is not raised at the earliest opportunity, it fails to comply with the condition of urgency.

In these circumstances, I cannot allow the application to move the Adjournment under Standing Order No. 9 today, because this is not the first opportunity of bringing the matter to the notice of the House.

Orders of the Day — FINANCE (No. 2) BILL

As amended, further considered.

3.35 p.m.

Mr. Speaker: We come now to Amendment No. 28.

Clause 27.—(CONVEYANCES AND TRANSFERS ON SALE: REDUCTION OF DUTY, AND AMENDMENT OF PROVISIONS FOR EXEMPTION.)

Mr. Richard Wainwright: I beg to move Amendment No. 28, in page 33, line 8, to leave out "£5,500" and to insert "£6,700".

Mr. Speaker: With this Amendment, we art discussing Amendment No. 29, in line 8, leave out "£7,000" and insert "£8,960", and Amendment No. 30, in line 9, leave out "£5,500" and insert "£6,700".

Mr. Wainwright: This Amendment arises partly from a strong concern for house ownership, which I believe is shared in almost all parts of the House, partly from an equally strong concern for the least possible interference with the mobility of skilled labour, which again commands the assent of most hon. Members, and also from a strong feeling amongst Liberals against the whole survival of stamp duties. That is a point which I must not pursue, but which I mention by way of background information.
Clearly, this is not a year, economically speaking, in which to press for the abolition of the whole of the stamp duties, but we are concerned to conduct a holding operation to try to make sure that at least the drag of these duties on the freedom of the economy should not get any worse, because that is exactly what they will do unless the exemption limits are kept in line with the price level of housing.
It is true that a change is provided in the Bill. The Budget statement referred to an upward change in the exemption limits for stamp duty purposes in respect of house purchase. However, the Chancellor did not explain the figures on which he hay hit for this purpose, and he was not able to claim, nor did he, that his

new figures keep pace with the rising cost of houses. It seems to me that he has taken some advice—

Mr. Eric Lubbock: Did not the Financial Secretary say, in answer to an intervention by me, that he did not even know whether these figures kept pace with the rise in the cost of housing?

Mr. Wainwright: That reinforces the point which I was about to make that the Government seem to have taken advice from G. K. Chesterton, that if a thing is worth doing it is worth doing badly.
Additional reasons why it is of great importance to the citizen that these limits should be kept in line with contemporary prices are, first, that in this matter there is no provision—and I am not suggesting there should be—for marginal relief. At the moment, if the entirety of a house purchase transaction goes above the precise figure of the exemption limit, duty becomes payable on the whole transaction. For instance, under the Government's proposed exemption limit of £5,500 the stamp duty for a transaction certified at that figure will be nil, but for a house purchased at £5,600 the stamp duty will be £28. Looked at in one realistic way, this is a duty at a rate equivalent to 28 per cent., because the addition of only £100 to the purchase price creates a liability to duty of £28. I could go on with similar examples.
The second additional reason which I wish briefly to adduce is the unfairness of the proposed, too small, exemption limits as between different regions of the country. Let me consider a man in the middle range of skill or management—these are the people whose housing needs we are discussing—who is moving from the North to the South. He will, in all likelihood, dispose of his house in the North to a buyer who will not suffer any stamp duty, but when he himself buys a house anywhere in the Home Counties to suit a man on his salary scale, he will almost certainly buy a property at above the exemption limit. We believe that the exemption limit should have a proper relationship at least to the average cost of homes which are being exchanged on the private market.
The best information available to us—the Government may have superior sources of information—is from the


Monthly Digest of Statistics. An index is kept of the average value of new dwellings mortgaged by private owners. This covers land as well as construction, and refers only to dwellings on which building societies have advanced mortgages. Using these figures, and making what seems to be a reasonable assumption in respect of the latest quarter-year to bring us up to the date on which the Government's new exemption limits will take effect, namely, 1st August this year, our contention is that to keep pace with the rising cost of private housing the exemption limit from all stamp duty should be at least £6,000, and not £5,500 as in the Bill, and the exemption limit for half-rate duty should be at least £8,000 and not £7,000. This, to the best of our information, would bring the citizen into an equitable position as at 1st August of this year.
It may be asked why rather curious figures appear in the Amendment. They were, frankly, intended to attract some attention because of their precision. We believe that although the round figures I have mentioned would put the Government in some sort of respectable light, real justice demands that the limits should be raised further, in anticipation of the almost inevitable further increase in house prices.
It appears to be a fact that it takes about four years for this House, or any Government, to get round to tackling the exemption limits afresh. We have, therefore, taken a mean date two years from now, and extrapolated our figures so that date. It is this calculation which leads to the figures in the Amendment. If, in 1963 when the House, without any contention between the three parties agreed to increases in these exemption limits home ownership was considered to be important enough to encourage, and if the mobility of skilled people was considered to be a prime need for the economy, we contend that these objectives are as desirable, if not more so today.

3.45 p.m.

Mr. John Smith: The Amendment is a step in the right direction, and I support it for the reason just touched on by the hon. Member for Colne Valley (Mr. Richard Wainwright).
I do not think that this duty produces any net yield to the Revenue at all. I know that the Financial Secretary will produce impressive figures for the apparent yield of this duty. Questions have been asked about this, which I have checked. None of them is exactly on this point, but there is sufficient to indicate that the apparent yield can be made to look quite impressive.
I do not think that the Government have studied sufficiently the way in which stamp duty reduces the yield of other taxes. The chief example, which we have touched on before, is the stamp duty on cheques. The information which I have gathered makes me believe that the cost to the banks who have to account to the Revenue for this duty, and the cost to the firms who pay it on their cheques, reduces the profits of the banks, and the firms who are their customers, by an amount which, in turn, reduces the tax they pay by a greater amount than the stamp duty raises. This is a matter to which I shall return next year.
The precise form of stamp duty dealt with in the Amendment is related to the provisions of Schedule 11 to the 1963 Finance Act. This Schedule sets out the rates at which stamp duty is paid on these small transactions. There are seven rates in that table where the duty raised is less than 1s. on each transaction, and 21 rates where the duty raised is less than £1 on each transaction. In the second part of the Schedule, dealing with stamp duty on leases, the duty is charged in 32 different categories, of which the smallest is 1s., and the largest is £12.
I think it likely that every one of these transactions costs the Revenue money, and there are a great number of them in any year. All these documents, which will no longer have to go to the Stamp Duty Office if the Amendment is accepted have at the moment to be presented for stamping, and in most cases the cost of taking them to the Stamp Office—for example, in my constituency I think that it is to Moorgate or to Bush House—of dealing with the payment of duty, paying the Revenue, debiting the clients in the solicitor's ledgers, and of recovering the money from the client, must far exceed the duty raised.
That brings me to the prime reason which I first mentioned for abolishing


the duty on the transactions described in the Clause. Solicitors charge fees for conveyancing at a fixed rate, and therefore the cost of getting a document stamped comes directly off the profits of the partners in the firm. I am not a solicitor, but I understand that there are some present. I hope they will not mind my saying that solicitors, on the whole, earn quite a good living, and pay quite a high rate of tax, and that therefore the cost of getting the documents stamped comes directly off the taxes paid by the solictors concerned.
There is also a further point of this nature, which is that the introduction of the Capital Gains Tax has effectively reduced the yield of stamp duty on conveyancing in all cases where the transaction is liable to Capital Gains Tax from 1 per cent. to ⅔ of 1 per cent., because when a property is sold the stamp duty which was involved in its original purchase is a deduction for Capital Gains Tax purposes.

Mr. Speaker: I hate to interrupt the hon. Member, but it seems to me that he is discussing stamp duty in general, and lie must link what he has to say to the three Amendments specifically before us.

Mr. Smith: I must apologise, Mr. Speaker. I am afraid I am tremendously bad at keeping in order. I feel it is more an art than a science. My point was that this Amendment deals with two types of transaction. It deals with those people who are buying their own houses, where of course Capital Gains Tax does not arise, but it also deals with other transactions of the same size on which Capital Gains Tax will be payable. What I am saying is that if Capital Gains Tax is payable then the true yield of stamp duty is reduced from 1 per cent. to ⅔ of 1 per cent.—and in other cases from ½ per cent. to two-thirds of that, and therefore it is not as important to the Revenue as I think it is possible the Financial Secretary may indicate.
Further, many of these transactions, small though they are, may take the form of gifts, and will have to be adjudicated for stamp duty purposes; and the cost of adjudication is very great. I think I am right in saying that adjudication is now done by the Estate Duty Office rather than as in the past. It costs no more

to adjudicate a value for an 80 per cent. tax, as in the case of Estate Duty, than it does to adjudicate for the duty we are considering here involving ⅔ of ½ of 1 per cent. Therefore, the cost to the Revenue of settling some of the matters included in this Amendment is relatively over 80 times as great as the cost of settling other similar transactions.
Sir Stafford Cripps, to his great credit, abolished the 1d. stamp duty on proxies. He took an enormous administrative burden from the backs of the entire community and released their energies for better purposes. If the Financial Secretary would agree to take these two first resistant Liberal steps towards abolishing stamp duty altogether, and certainly on the transactions included in this Amendment, he would produce no less a saving than did Sir Stafford Cripps in wasted time, in wasted labour, in wasted money and in wasted tax.

The Financial Secretary to the Treasury (Mr. Niall MacDermot): The hon. Member for Colne Valley (Mr. Richard Wainwright), in moving his Amendment, said that the purpose of it was to keep the raising of the exemption limit for this branch of stamp duty in line with increases in the price levels of houses. That was his object. With respect, I think that the Government proposals in the Bill do achieve that, and that what he is proposing would go much beyond it.
The hon. Gentleman the Member for Orpington (Mr. Lubbock) suggested in an intervention that I had pleaded ignorance to the movement in the cost of housing. I did not. What I pleaded ignorance to was the specific figure which I was asked to give, which was the increased building costs, which is a different matter.
To come, first, to the position of the cost of housing and the Government's proposal, it is proposed that the limit of complete exemption should be raised from the £4,500 figure at which it was fixed in 1963 to £5,500, and there is the corresponding increase in the lower rate of ½ per cent. or £6,000 to £7,000. Of course, the prices of houses vary in different parts of the country, but if one takes the national average, a house worth £4,500 in 1963 is worth £5,400 in 1967, so what we have done is to raise


the limit slightly higher than would have been justified by the national average in the increase in housing costs.
We have had in mind, of course, the fact which was referred to by the hon. Gentleman in moving the Amendment, that house prices, in the South-East in particular, are higher than the average, and that more people will be in the position of moving from North to South. If we compare it with the figures which were available to us from the Co-operative Permanent Building Society's index of London prices—according to that—a £4,500 house in 1963 was worth £5,600 at the end of December, 1966—again, very close to the figure in the Government's proposal.
The hon. Gentleman the Member for Orpington, as I say, inquired last time when we were discussing this in Committee about the increase of building costs. I have those figures now. I think that the base date is 1954 for the purpose of these figures. One takes 1954 prices as being 100, and on that basis the increase of building costs was 126 in 1963 and was 140 in 1966. So it will be seen, again, that the measure of increase in our proposals is considerably better than the increase in building costs. The reason for this is, of course, that the increase in building costs does not reflect in full the increase in house prices, because of the increase in the value of land.
I hope that I have satisfied the House that our proposals do keep pace, and slightly more than keep pace, with the average house purchase costs throughout the country.

Mr. Richard Wainwright: I interrupt only to inquire whether all the figures the hon. and learned Gentleman has given the House in the last few minutes go only up to December, 1966. Or is he able to assure us that they go up to 1st August, when his limits start to take effect?

Mr. MacDermot: I think that the figures are up to December—certainly, the Co-operative Permanent Building Society one which I gave. No, I think that the £5,400 figure I gave is at 1967. I am unable to tell the hon. Gentleman which month—how far into 1967 it goes.
The hon. Member for the Cities of London and Westminster (Mr. John Smith), in an ingenious argument, sought to persuade the House that stamp duties are really counter-productive and that the Revenue would benefit by abolishing them. I do not know whether he persuaded his hon. Friends, but his arguments did not persuade me. Apart from the ingenious countervailing factors he suggested, the additional costs of what is proposed in this Amendment would be as follows. I should give the House revised figures of the estimates I made of the Government's proposals when we were in Committee.
As a result of further information which has since become available it is now estimated that the cost of the Government's proposals would be £4 million in a full year and £3 million this year; and the additional cost of what is proposed in this Amendment would be another £3½ million in a full year, £2½ million this year, making a total of £7½ million in a full year and £5½ million this.
So my answer to the hon. Gentleman the Member for Colne Valley is that the Government's proposals do pass the test which he suggested should be applied to the increase which it is right to make now in the present circumstances; and that it would be only in the extreme cases, in areas in the South-East, where prices have risen to the highest degree, that our proposals would not keep pace. I suggest that we have got to take a national view of this, and that to raise the limit to an extent which would ensure that everyone would be in the same position as he was in 1963 would involve raising the limit far too high in other parts of the country and in particular in the North.
For these reasons, I must advise the House to reject the Amendment.

4.0 p.m.

Mr. Lubbock: I am afraid that the Liberal Party cannot possibly accept the Financial Secretary's argument. In particular, although I mentioned building costs in an intervention in Committee, he must have realised since then—as he pointed out rather in passing—that building costs have not increased nearly as much as the cost of new house mortgages and that therefore


this index is not suitable for this purpose.
I agree that the figures show that, on the index which started in 1954, there has been an increase only from 126 to 140 over the relevant period, but, in the same publication, the Monthly Digest of Statistics, I find that the increase in the average value of new dwellings, as mentioned by my hon. Friend the Member for Colne Valley (Mr. Richard Wainwright) was 30·1 per cent. from August, 1963, when the limits were last amended, to the first quarter of this year. I would, therefore, like to know where the hon. and learned Gentleman gets his figures of a house costing £4,500 in 1963 being worth only £5,600 in 1967. This figure lacks precision, and I wonder whether he has merely estimated it himself.
Upon inquiring of the Building Societies Asociation, I discovered that it had figures only up to the end of last year, and the hon. and learned Gentleman admitted that the figures of the Cooperative Permanent Building Society went only up to December, 1966. This is not adequate, because, as he knows, the limits will not be raised until August 1st and he should, therefore, multiply the difference in costs between £4,500 and £5,600. which he said was typical of London, by 4½/3 so as to extrapolate the increase in building costs which we all know will take place over this period.
This would not be enough to satisfy us, however. We do not want merely to turn the clock back to August 1st, 1963. The opportunity should be taken to compensate house purchasers who acquire dwellings over the next few years for the inevitable rise which they will face. Therefore, if one assumes that it will be another four years before these limits are changed, we thought that it would be reasonable to estimate what the difference will be two years hence. That is what we have done, and the hon. and learned Gentleman did not reply to that at all.
I should like to make one or two constituency points in support of this argument. The hon. and learned Gentleman admitted that the cost of housing in the South-East and the Home Counties is very much larger than elsewhere, but I should like to tell him that one cannot get anything like a reasonable modern house for

the prices mentioned in the Bill and that the houses which are beyond our own limits in the Amendment are nothing very spectacular. They are not the sort of thing in which one would expect millionaires to live.
I will give some examples. A house on Crofton Road, a detached, three-bedroomed bungalow with garage, is £6,300 and I can give one or two similar examples. A semi-detached, three-bedroomed house in Broughton Road, with two reception rooms and a garage, is £5,950. Going up a little, a three-bedroomed detached house with two reception rooms and a garage in Tubbenden Lane is £7,450, and another in that neighbourhood, in Tubbenden Close, a three-bedroomed house with through lounge and garage, is £8,000.
I can assure the hon. and learned Gentleman that, if he came to my constituency, he would find that these are not outrageous prices or very much larger than the district's average. These are typical examples of the sort of house in which the young executive has to live when he comes down to London. I am amazed, when I see young married couples with children living in these houses, that they can possibly afford the enormous repayments involved—

Mr. F. J. Bellenger: Is the hon. Gentleman quoting asking prices or sale prices?

Mr. Lubbock: In this case, they would be the same, because their source is an estate agent in the Orpington area, whose name I do not wish to mention, but who, I can assure the right hon. Gentleman, is one of the most successful in my constituency. It is, therefore, reasonable to assume that, although these are asking prices, purchasers will be able to pay them. I am not surprised that the right hon. Gentleman expresses doubts, but, if he came to my constituency, I would prove to him quite simply, by taking him around a typical housing area, that these prices are by no means exceptional.
The Financial Secretary's reply was entirely unsatisfactory. Of course, we would like ultimately to sweep away the stamp duties on house purchase entirely, but we are not going that far. We thought that the suggestion in the Amendment and in the two related ones was a reasonable one for him to accept in a year of financial stringency. Because his reply


was so disappointing, I must ask my right hon. and hon. Friends to accompany me into the Lobby to express our protest.

Mr. Charles Fletcher-Cooke: I shall certainly accompany the hon. Member for Orpington (Mr. Lubbock) into the Lobby. It is clear from the Financial Secretary's reply that, so far from this being a reforming Clause, it barely keeps up with the tide of events sweeping over the Treasury, that the figures are already out of date and that, in real terms, people would be paying more stamp duty than they were last year or at any rate in 1963.
The Financial Secretary was very frank and did not put this forward as a reforming measure. Nor could he, in view of subsequent Clauses, which seek to increase the incidence of these dreadful duties. He did not answer the point of my hon. Friend the Member for Cities of London and Westminster (Mr. John Smith) about the expenses of adjudication, which are monstrously high in proportion to the yield. Nor could he, because he knows that that is the case.
Nor did he answer the general point—this is in order and relevant on the

Amendments—namely, that the stamp duty, of all duties, because of its ancient and barbaric origin, is the easiest to evade, because it is a duty on documents and documents alone. Anyone who puts his mind to it can produce simple evasions—

Mr. Speaker: Order. With respect, the hon. and learned Gentleman should link his point about evasion to the variation of sums proposed in the Amendment.

Mr. Fletcher-Cooke: Certainly I will, Mr. Speaker. People who are concerned in these financial brackets are the people who cannot, on the whole, evade, because they are ordinary people and therefore obliged to pay the tax, because they have not the financial and legal expertise at their elbow which people indulging in much larger transactions often have. It is, therefore, monstrous that the higher figure—which is in fact not very high—suggested by the Liberal Party, should not be accepted.

Question put, That "£5,500" stand part of the Bill:—

The House divided: Ayes 204, Noes 138.

Division No. 398.]
AYES
[4.10 p.m.


Allaun, Frank (Salford, E.)
Crosland, Rt. Hn. Anthony
Greenwood, Rt. Hn. Anthony


Alldritt, Walter
Crossman, Rt. Hn. Richard
Gregory, Arnold


Allen, Scholefield
Dalyell, Tam
Grey, Charles (Durham)


Anderson, Donald
Davies, Dr. Ernest (Stretford)
Griffiths, David (Rother Valley)


Archer, Peter
Davies, G. Elfed (Rhondda, E.)
Griffiths, Rt. Hn. James (Llanelly)


Armstrong, Ernest
Davies, Ifor (Gower)
Griffiths, Will (Exchange)


Atkins, Ronald (Preston, N.)
Davies, S. O. (Merthyr)
Hamilton, James (Bothwell)


Atkinson, Norman (Tottenham)
Delargy, Hugh
Hamilton, William (Fife, W.)


Bagler, Gordon A. T.
Dempsey, James
Harming, William


Barnett, Joel
Diamond, Rt. Hn. John
Hannan, William


Baxter, William
Dickens, James
Harrison, Walter (Wakefield)


Beaney, Alan
Dobson, Ray
Hart, Mrs. Judith


Benee, Cyril
Doig, Peter
Haseldine, Norman


Blnns, John
Dunn, James A.
Hattersley, Roy


Bishop, E. S.
Dunwoody, Dr. John (F'th &amp; C'b'e)
Herbison, Rt. Hn. Margaret


Blackburn, F.
Eadie, Alex
Horner, John


Boardman, H.
Edelman, Maurice
Howarth, Robert (Bolton, E.)


Booth, Albert
Edwards, Rt. Hn. Ness (Caerphilly)
Howie, W.


Bowden, Rt. Hn. Herbert
Edwards, Robert (Bilston)
Huckfield, L,


Braddock, Mrs. E. M.




Bray, Dr. Jeremy
Edwards, William (Merioneth)
Hughes, Emrys (Ayrshire, S.)


Brooks, Edwin
English, Michael
Hughes, Roy (Newport)


Brown, Rt. Hn. George (Belper)
Ensor, David
Hunter, Adam


Brown, Hugh D. (G'gow, Provan)
Evans, Ioan L. (Birm'h'm, Yardley)
Jackson, Colin (B'h'se &amp; Spenb'gh)


Brown, Bob (N'c'tle-upon-Tyne, W.)
Faulds, Andrew
Jackson, Peter M. (High Peak)


Buchan, Norman
Fernyhough, E.
Janner, Sir Barnett


Buchanan, Richard (G'gow, Sp'burn)
Finch, Harold
Johnson, James (K'ston-on-Hull, W.)


Butter, Herbert (Hackney, C.)
Fitch, Alan (Wigan)
Jones, J. Idwal (Wrexham)


Callaghan, Rt. Hn. James
Fletcher, Ted (Darlington)
Kelley, Richard


Cant, R. B.
Foot, Michael (Ebbw Vale)
Kerr, Dr. David (W'worth, Central)


Carmichael, Neil
Ford, Ben
Kerr, Russell (Feltham)


Castle, Rt. Hn. Barbara
Forrester, John
Leadbitter, Ted


Chapman, Donald
Fowler, Gerry
Lee, Rt. Hn. Frederick (Newton)


Coe, Denis
Fraser, Rt. Hn. Tom (Hamilton)
Lector, Miss Joan


Coleman, Donald
Galpern, Sir Myer
Lever, Harold (Cheetham)


Concannon, J. D.
Garrett, W. E.
Lewis, Arthur (W. Ham, N.)


Crawshaw, Richard
Ginsburg, David
Lewis, Ron (Carlisle)




Lipton, Marcus
Noet-Baker, Rt. Hn. Philip (Derby, S.)
Spriggs, Leslie


Lomas, Kenneth
O'Malley, Brian
Steele, Thomas (Dunbartonshire, W.)


Loughlin, Charies
Oram, Albert E.
Stewart, Rt. Hn. Michael


Luard Evan
Oswald, Thomas
Strauss, Rt. Hn. G. R.


Lyon, Alexander W. (York)
Owen, Dr. David (Plymouth, S'tn)
Swain, Thomas


Lyons, Edward (Bradford, E.)
Owen, Will (Morpeth)
Swingler, Stephen


McBride, Neil
Paget, R. T.
Symonds, J. B.


McCann, John
Palmer, Arthur
Thomson, Rt. Hn. George


MacColl, James
Pannell, Rt. Hn. Charles
Tomney, Frank


MacDermot, Niall
Park, Trevor
Tuck, Raphael


Macdonald, A. H,
Parkyn, Brian (Bedford)
Urwin, T. W.


Mackenzie, Gregor (Ruthergten)
Pavitt, Laurence
Wainwright, Edwin (Dearne Valley)


Mackie, John
Pearson, Arthur (Pontypridd)
Watkins, David (Consett)


Mackintosh, John P.
Perry, Ernest G. (Battersea, S.)
Watkins, Tudor (Brecon &amp; Radnor)


McMillan, Tom (Glasgow, C)
Price, Thomas (Westhoughton)
Wellbeloved, James


McNamara, J. Kevin
Price, William (Rugby)
Wells, William (Walsall, N.)


MacPherson, Malcolm
Probert, Arthur
White, Mrs. Eirene


Mahon, Peter (Preston, S.)
Rankin, John
Whitlock, William


Mallalieu, E. L. (Brigg)
Rees, Merlyn
Willey, Rt. Hn. Frederick


Mallalieu, J. P. W. (Huddersfield, E.)
Rhodes, Geoffrey
Williams, Alan Lee (Hornchurch)


Manuel, Archie
Roberts, Albert (Normanton)
Williams, Clifford (Abertillery)


Mapp, Charles
Robertson, John (Paisley)
Williams, Mrs. Shirley (Hitchin)


Millan, Bruce
Robinson, Rt. Hn. Kenneth (St. P'c'as)
Williams, W. T. (Warrington)


Miller, Dr. M. S.
Robinson, W. O. J. (Walth'stow, E.)
Willis, George (Edinburgh, E.)


Mitchell, R. C. (S'th'pton, Test)
Rogers, George (Kensington, N.)
Wilson, William (Coventry, S.)


Morgan, Elystan (Cardiganshire)
Sheldon, Robert
Winnick, David


Morris, Alfred (Wythenshawe)
Shinwell, Rt. Hn. E.
Winterbottom, R. E.


Morris, Charles R. (Openshaw)
Short, Mrs. Renée (W'hampton, N. E.)
Woodburn, Rt. Hn. A.


Moyle, Roland
Silkin, Rt. Hn. John (Deptford)
Woof, Robert


Murray, Albert
Silkin, Hn. S. C. (Dulwich)



Neal, Harold
Silverman, Julius (Aston)
TELLERS FOR THE AYES:


Newens, Stan
Slater, Joseph
Mr. Harold Walker and


Noel-Baker. Francis (Swindon)
Small, William
Mr. Joseph Harper.




NOES


Baker, W. H. K.
Griffiths, Eldon (Bury St. Edmunds)
Morrison, Charles (Devizes)


Balniel, Lord
Half, John (Wycombe)
Munro-Lucas-Tooth, Sir Hugh


Bell, Ronald
Hall-Davis, A. G. F.
Murton, Oscar


Bennett, Sir Frederic (Torquay)
Hamilton, Michael (Salisbury)
Nicholls, Sir Harmar


Biffen, John
Harris, Frederic (Croydon, N.W.)
Noble, Rt. Hn. Michael


Blggs-Davison, John
Harris, Reader (Heston)
Onslow, Cranley


Birch, Rt. Hn. Nigel
Harrison, Brian (Maldon)
Osborn, John (Haltam)


Black, Sir Cyril
Harrison, Col. Sir Harwood (Eye)
Osborne, Sir Cyril (Louth)


Bossom, Sir Clive
Harvey, Sir Arthur Vere
Page, Graham (Crosby)


Boyd-Carpenter, Rt. Hn. John
Harvie Anderson, Miss
Peel, John


Braine, Bernard
Heald, Rt. Hn. Sir Lionel
Peyton, John


Bromley-Davenport, Lt.-Col.Sir Watter
Hill, J. E. B.
Pike, Miss Mervyn


Brown, Sir Edward (Bath)
Hirst, Geoffrey
Pink, R. Bonner


Bruce-Gardyne, J.
Hogg, Rt. Hn. Quintin
Prior, J. M. L.


Buchanan-Smith, Alick (Angus, N&amp;M)
Holland, Philip
Pym, Francis


Bullus, Sir Eric
Hooson, Emlyn
Ramsden, Rt. Hn. James


Campbell, Gordon
Howell, David (Guildford)
Ridley, Hn. Nicholas


Carr, Rt. Hn. Robert
Hunt, John
Ridedale, Julian


Cary, Sir Robert
Hutchison, Michael Clark
Rossi, Hugh (Hornsey)


Channon, H. P. G.
Irvine, Bryant Godman (Rye)
Royle, Anthony


Clegg, Walter
Jenkin, Patrick (Woodford)
Scott, Nicholas


Cooke, Robert
Jennings, J. C. (Burton)
Sharples, Richard


Costain, A. P.
Johnston, Russell (Inverness)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Crosthwalte-Eyre, Sir Oliver
Kaberry, Sir Donald
Smith, John


Cunningham, Sir Knox
Kershaw, Anthony
Stodart, Anthony


Currie, G. B. H.
Kimball, Marcus
Stoddart-Scott, Col. Sir M. (Ripon)


Dance, James
King, Evelyn (Dorset, S.)
Tapseil, Peter


Davidson, James (Aberdeenshire, W.)
Kirk, Peter
Taylor, Sir Charles (Eastbourne)


Dean, Paul (Somerset, N.)
Kitson, Timothy
Taylor, Edward M.(G'gow, Cathcart)


Dodds-Parker, Douglas
Lambton, Viscount
Thatcher, Mrs. Margaret


Doughty, Charles
Langford-Holt, Sir John
Turton, Rt. Hn. R. H.


Douglas-Home, Rt. Hn. Sir Alec
Legge-Bourke, Sir Harry
Walker, Peter (Worcester)


Elliott,R.W.(N'c'tle-upon-Tyne,N.)
Lloyd, Rt. Hn. Selwyn (Wirral)
Wall, Patrick




Walters, Dennis


Eyre, Reginald
Longden, Gilbert
Ward, Dame Irene


Farr, John
McAdden, Sir Stephen
Weatherill, Bernard


Fletcher-Cooke, Charles
Macleod, Rt. Hn. Iain
Webster, David


Fortescue, Tim
McMaster, Stanley
Whitelaw, Rt. Hn. William


Foster, Sir John
Maginnis, John E.
Wills, Sir Gerald (Bridgwater)


Galbraith, Hon. T. G.
Marples, Rt. Hn. Ernest
Wilson, Geoffrey (Truro)


Gibson-Watt, David
Maude, Angus
Winstanley, Dr. M. P.


Gilmour, Ian (Norfolk, C.)
Mawby, Ray
Wolrige-Gordon, Patrick


Gilmour, Sir John (Fife, E.)
Maxwell-Hyslop, R. J.
Worsley, Marcus


Glover, Sir Douglas
Maydon, Lt.-Cmdr. S. L. C.
Younger, Hn. George


Gower, Raymond
Mills, Peter (Torrington)



Grant, Anthony
Mills, Stratton (Belfast, N.)
TELLERS FOR THE NOES:


Grant-Ferris, R.
Monro, Hector
Mr. Eric Lubbock and


Gresham Cooke, R.
More, Jasper
Mr. Richard Wainwright

Mr. MacDermot: I beg to move Amendment No. 31, in page 33, line 38, to leave out from the beginning to end of line 16 on page 34 and to insert:
(3) The said section 42 shall not apply to any instrument executed on or after the said 1st August unless it is also shown to the satisfaction of the Commissioners that the instrument was not executed in pursuance of or in connection with an arrangement whereunder—

(a) the consideration, or any part of the consideration, for the conveyance or transfer was to be provided or received, directly or indirectly, by a person other than a body corporate which at the time of the execution of the instrument was associated within the meaning of the said section 42 was either the transferor or the transferee (meaning respectively, the body from whom and the body to whom the beneficial interest was conveyed or transferred), or
(b) the said interest was previously conveyed or transferred, directly or indirectly, by such a person, or
(c) the transferor and the transferee were to cease to be associated within the meaning of the said section 42 by reason of a change in the percentage of the issued share capital of the transferee in the beneficial ownership (within the meaning of that section) of the transferor or a third body corporate;
and, without prejudice to the generality of paragraph (a) above, an arrangement shall be treated as within that paragraph if it is one whereunder the transferor or the transferee, or a body corporate associated with either as there mentioned, was to be enabled to provide any of the consideration, or was to part with any of it, by or in consequence of the carrying out of a transaction or transactions involving, or any of them involving, a payment or other disposition by a person other than a body corporate so associated.
This subsection shall, as respect instruments executed on or after the said 1st August, have effect in substitution for section 50 of the Finance Act 1938.
This Amendment has been put down in pursuance of an undertaking I gave in Committee to bring forward a new provision replacing the present subsection (4). Subsection (3) becomes unnecessary, and will disappear.
The House will remember that subsection (4) is intended to counter a device under which the relief from transfer duty on a transfer between two associated companies can be obtained for a transfer paid for, in effect, by a person outside the group and forming part of an arrangement under which the transferee leaves the group. The way in which the device is countered at present in the Bill is by providing that the transferor and the transferee companies must remain associated

with the group for at least a year after the transfer.
That was criticised by the hon. Member for Wycombe (Mr. John Hall) on the ground that the Bill should provide only against the transferee leaving the group; and that there were many innocent transactions in which the transferor might wish to leave a group after making the transfer so that some of the assets might be retained in the group. When we discussed the matter in Committee, I accepted the validity of the criticism and suggested that we would seek to bring forward an Amendment based on the existing Section 50 of the Finance Act, 1938, strengthened in relation to this particular problem. That is what the Amendment does. The Confederation of British Industry, which was concerned about the original drafting in the Clause, has, I think, been consulted and I think I can say that it is content with the proposals in the Amendment.

Mr. John Hall: It is pleasant to be able to congratulate the Government on introducing an Amendment in furtherance of a promise given in Committee. As the Financial Secretary said, the Clause as originally drafted was likely to penalise innocent transactions and we attempted to put this right by our Amendment No. 175 in Committee. We are grateful for the opportunity to support the present Amendment and to thank the Financial Secretary for honouring his pledge with respect to it.

Amendment agreed to.

Clause 28.—(LOAN CAPITAL: INCREASE OF DUTY, AND AMENDMENTS AS TO EXEMPTIONS AND RELIEFS.)

The Joint Under-Secretary of State for Economic Affairs (Mr. Harold Lever): I beg to move Amendment No. 32, in page 34, line 43, to leave out from 'unless' to the end of line 18 on page 35 and insert:
'it is to be repaid within five years of the date of issue, or is repayable on demand or after notice not exceeding twelve months by the person for the time being entitled to repayment; and where any loan capital has been issued without payment of duty under the said section 8 by reason of the terms as to its repayment, and those terms are varied in such a manner that it would have been chargeable with duty under that section if the new terms had been the terms of issue—

(a) the said section 8 shall apply thereto as if it were an amount of loan capital issued by


the company at the time when the variation took effect, but
(b) if duty under the heading "Marketable Security", or that beginning "Mortgage, Bond, Debenture, Covenant", in Schedule 1 to the Stamp Act 1891 has been paid on one or more trust deeds or other instruments securing the capital or any part thereof, or securing it together with other loan capital, the duty chargeable by virtue of paragraph (a) above shall be reduced by an amount equal to the excess of the duty paid on those instruments over that which would have been so payable if they had not secured it or, as the case may be, that part of it.
(4) For the purposes of the last preceding subsection, loan capital shall not be treated as falling to be repaid within five years of its date of issue if it is issued pursuant to an agreement under or by virtue of which the borrower is or may be entitled to receive another loan for a period which will or may expire more than five years after that date.'
This Amendment was put down as a result of discussion in Committee in which very constructive proposals and arguments were advanced by the Opposition. I think that the effect of the Amendment will more than meet the—

Mr. Speaker: Order. Will the hon. Gentleman please speak up?

Mr. Lever: I think that the effect of Amendment will more than meet the demands made in Committee. The result of the Amendment is that now any stock issued which has a life of not more than five years will be exempt and that any stock which is repayable on demand or on not more than 12 months' notice will be exempt. This, of course, refers to stock not quoted on the Stock Exchange.
The result is that the more permanent capital of a company will be assimilated at the full rate and temporary capital will be exempted from that rate. This meets the suggestion made particularly by the hon. Member for Wycombe (Mr. John Hall) in Committee, to whom we are obliged.

Mr. John Hall: It is not very often that I am in a position of being able twice in succession to thank the Government for an Amendment which carries out promises given to us in Committee. As the hon. Gentleman said, this Amendment very largely carries out what we had in mind. The only question I put is whether there was a particular reason for the period of five years being stipulated. I understand that when the matter was discussed 10 years was mentioned. Did the hon. Gentleman have anything in mind

when introducing five years instead of a longer period? Subject to that point, on which I should like him to comment, we welcome the Amendment and thank the Government for introducing it.

Mr. Harold Lever: I speak again by leave of the House. It is a matter of judgment at what point we should cut off the exemption. We were anxious to exempt anything that could be regarded as short-term temporary borrowing. We came to the conclusion that this would be fairly done at five years. Ten years would be too much in the nature of fixed capital rather than temporary capital. We thought this the best and fairest point of time for cutting off.
I do not remember that in Committee more than two years were asked for, but in providing for five years we thought that we had taken a judgment which was reasonable.

Amendment agreed to.

Further Amendment made: No. 33, in page 36, line 9, leave out from 'duty' to 'executed' in line 11 and insert:
'under the heading "Marketable Security", or that beginning "Mortgage, Bond, Debenture, Covenant", in Schedule 1 to the Stamp Act, 1891, has been paid on one or more trust deeds or other instruments'.—[Mr. Harold Lever.]

Mr. Harold Lever: I beg to move Amendment No. 34, in page 36, line 16, to leave out from 'on' to 'had' in line 18 and to insert:
'those instruments over that which would have been so payable if they'.
This is a drafting Amendment. I pay tribute to the hon. Member for Wycombe (Mr. John Hall), who had a hand in suggesting both these useful Amendments.

Mr. Speaker: It will help the Official Reporters if the hon. Gentleman speaks up.

Amendment agreed to.

Clause 41.—(PROVISIONAL COLLECTION OF TAXES.)

Mr. MacDermot: I beg to move Amendment No. 35, in page 46, line 5, at the end to insert:
'and in relation to a resolution to which this subsection applies, the references in subsection (2) above and in proviso (b) to the said section 1(1) to the variation of the tax by a Bill or an Act shall be construed as references to its repeal or abolition by, as the case may require, a Bill or an Act'.


This is little more than a drafting Amendment. It makes clear that in the case of the application of the Provisional Collection of Taxes Act, 1913, to a Resolution abolishing or repealing taxes as opposed to one varying or renewing taxes, the condition in Clause 41(2) requiring Second Reading of a Bill within 25 days is to be read with reference to a Bill abolishing or repealing a tax.

Amendment agreed to.

Clause 45.—(CITATION, INTERPRETATION, CONSTRUCTION, EXTENT AND REPEALS.)

Amendments made: No. 36, in page 49, line 20, leave out 'subject to' and insert:
'without prejudice to the application to Northern Ireland of section 26(7) and of'.

No. 37, in line 38 leave out 'Acts' and insert 'enactments'.—[Mr. MacDermot.]

Schedule 10.—(GROUP RELIEF.)

The Chief Secretary to the Treasury (Mr. John Diamond): I beg to move Amendment No. 38, in page 65, line 4, at the end to insert:
(3) In the case of a claim made by a company as a member of a consortium only a fraction of the amount of the loss may be set off under sub-paragraph (1) above, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under paragraph 6(2) of this Schedule.

Mr. Speaker: It has been suggested to me from the Government benches that we might take, with this Amendment, Amendments No. 39, 40 and 42.

Mr. Patrick Jenkin: That is entirely acceptable.

Mr. Diamond: I am grateful to you, Mr. Speaker, for what you have said.
The four Amendments which we are discussing together ensure that the maximum that each consortium member can claim by way of relief for a jointly owned company's loss or other amount eligible for relief is its proper share based on its shareholding. That is to say, if five companies each own 20 per cent. of the shares, they can claim for up to 20 per cent. each of the loss. The Amendments deal in like terms with trade losses, excess capital allowances, excess management expenses, and excess charges on income, but the principle is the same in each case.

Amendment agreed to.

Further Amendments made: No. 39, in page 65, line 16, at end insert:
(2) In the case of a claim made by a company as a member of a consortium only a fraction of the excess referred to in subparagraph (1) above may be so set off, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under paragraph 6(2) of this Schedule.
No. 40, in line 35, at end insert:
(4) In the case of a claim made by a company as a member of a consortium only a fraction of the amount of the excess referred to in sub-paragraph (1) above may be set off under that sub-paragraph, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under paragraph 6(2) of this Schedule.—[Mr. Diamond.]

4.30 p.m.

Mr. Patrick Jenkin: I beg to move Amendment No. 41, in page 65, line 35, at the end to insert:
(4) To the extent that a company's income arises from sources outside the United Kingdom, the company may elect that the income shall be disregarded in computing the amount by which the expenses of management exceed the company's profits for the purposes of sub-paragraph (1) above:
Provided that where such election is made no deduction for expenses of management shall be made under the said section 57 against that income from sources outside the United Kingdom.
In Committee we attempted to persuade the Government that there was a point of substance here. The Financial Secretary dealt with the matter. It was one of great complexity. I indicated that I would read his arguments in HANSARD in the cold light of morning and see whether there appeared to be more substance in them in the written word than there had appeared to be as he delivered them across the Table.
The point is simply that there are a number of different reliefs which can operate for Corporation Tax purposes. Two with which we are concerned in the Amendment are relief against double taxation and the relief which is available by way of management expenses against investment income. The purpose of the Amendment is to allow Clause 20 group relief to be so operated that a group of companies which is entitled both to relief against double taxation and relief for management expenses shall, where this is possible, obtain both reliefs in full and not have the one set off against the other.
The Financial Secretary argued that the Government could not allow both management expenses relief and double taxation relief. I have read the hon. and learned Gentleman's comparatively short speech several times, and I still remain entirely unconvinced. Why should not a group of companies in effect be entitled to both reliefs if there is enough income within the charge to Corporation Tax to exhaust both reliefs? These reliefs are in no sense mutually exclusive. Both reliefs have the same purpose, namely, to ensure that Corporation Tax is charged on what income is left after the statutory reliefs have been deducted.
The effect of Clause 20 and Schedule 10 as at present drawn is that, if part of the income of one of the companies in a group which has applied for group relief comes from overseas, and if it gets relief from double taxation so as to exhaust, or substantially to reduce, the amount of Corporation Tax which is charged, there is no provision for allowing the management expenses attributable to that company to be set off against the income of other companies in the group.
For the life of me, I cannot understand why this should be so. The nub of the Financial Secretary's argument seems to prove my case. He said this:
This could not be justified, for the simple reason that an investment company's incomings and outgoings are all elements in a single business and cannot be properly split up in this way. Its total investment income is its business income, and the net result of its year is the balance of total incomes and outgoings."—[OFFICIAL REPORT, 7th June, 1967; Vol. 747, c. 1199.]
I entirely agree. Therefore, to suggest that the fact that one subsidiary company's income has had set off against it the double taxation relief, so that there is no Corporation Tax charged on that income, precludes the due share of the management expenses being apportioned to another company in the group is quite unreasonable. I do not want to repeat the argument which I had with the Chief Secretary last night. The whole purpose of the Clause 20 position is to find out the profits and losses within a group of companies or within a consortium of companies. A group of companies should be entitled to do exactly what a single company could do if it had both classes of income in its own hands. This must be assumed to be the purpose of the

legislation. To limit it as it is limited by the Bill as at present drafted is a quite unreasonable restriction.
If the Amendment were accepted, this would reflect the position as outlined by the Financial Secretary in the passage I have read, namely, that the incomings and outgoings in an investment company's business are all to be regarded as elements in a single business. There seems to be no reason why the management expenses relief should be limited merely because some part of the income has already exhausted its liability to Corporation Tax by reason of double taxation relief.
On reflection, I believe that the Amendment has more substance that the Government were prepared to allow in Committee. This is why we have tabled it again and why we have thought it right to press the matter. I hope that on reflection the Government will be able to accept it.

Mr. MacDermot: I fear that there is a real difference of principle between us. I cannot meet the Amendment. The difference emerges most clearly in one sentence used by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) in Committee:
A group ought to be treated as a single entity …".
That carries the principle of group relief too far. A group of companies is not a single entity. It is a group of separate companies.
We believe that the right way to deal with the matter is, first, to work out what, under the existing tax law, is the tax position of each company individually within the group; and if, having settled that liability, there is then an item for which, under the existing code, there exists a relief by way of carry forward, be it for a trade loss or for excess of management expenses or excess of charges, each computed under the rules as for a single company, group relief can be given for that amount and for no other. We believe that that is the right approach and the right extent to grant group relief.
That is exactly what we are doing here. We are allowing an investment company the option to set off against the profits of other companies within the group only those items which it would, under existing law, be able to carry forward if it was


not a member of the group. When in Committee I used the words which the hon. Gentleman has quoted, that
… an investment company's ingoings and outgoings are all elements in a single business."—[OFFICIAL REPORT, 7th June, 1967; Vol. 747, c. 1198–9.]
I was referring to the company within the group. I was using those words to distinguish the position of an investment company from a trading company, which may have two separate incomes, namely, a trading income and an investment income, both of which fall to be treated in a different way from the point of view of relief.
I hope that I have succeeded in explaining clearly what the difference is between us, even if I do not succeed in convincing the hon. Gentleman that this is right.
I will make one final point on the way to test this. If under the existing law an investment company could pick and choose what current profits it could set its management expenses against and then carry the rest forward, I agree that there would be no answer to what is proposed in the Amendment. But that is not the position. Let us suppose that a single company had United Kingdom profits which were less than its management expenses and, in addition, had some foreign profits.
Let us suppose that it had an expectation of having greater U.K. profits in the following year. If the present law let it ignore the current foreign profits and carry forward the excess of management expenses over United Kingdom profits, it would be quite logical to do what we are being asked to do. That is not the position. Such a company is obliged to set its management expenses against the whole of its income, foreign as well as United Kingdom, before seeing whether there is any excess which it should be allowed to carry forward. We are, therefore, being perfectly logical in what we are doing, carrying out the right principle.
If companies want to have the full benefit of tax treatment as though they are a single entity, the remedy lies with them, namely, to convert themselves into a single entity.

Mr. Patrick Jenkin: With the leave of the House, may I make two comments

on the Financial Secretary's disappointing reply. In part, the Government's reluctance to meet the point of the Amendment stems from the defect in Clause 20 and Schedule 10 to which I have already drawn attention, that they go only part of the way to meet the wishes of industry for group treatment. But in part it is a reflection of the Government's rooted dislike of overseas investment.

Mr. Diamond: Really!

Mr. Jenkin: The Chief Secretary may exclaim, but it stems from their decision substantially to reduce, simply by the change-over to Corporation Tax, the facility for giving double tax relief in respect of tax paid overseas. This situation did not arise before the Corporation Tax. But here is a direct example where it appears that the relief is limited and, as a result, merely because companies are organised in groups, they are likely to be worse off, and the general relieving provisions of Clause 20 do not operate to help them.
However, even in my short time as a Member, I have listened to too many protestations of the impossibility of accepting an Amendment in one year, only to find an Amendment in exactly the same form tabled the following year, to be entirely without hope that the Government may have a second or even third look at this matter, together with the other matters on Clause 20 which the Chief Secretary undertook to look at between now and next year. I hope, therefore, that the Treasury will see that there is force in the case which we have put and that something more favourable will emerge next year.
I beg to ask leave to withdraw the Amendment.

Amendment, by leave withdrawn.

Amendment made: No. 42, in page 65, line 47, at end insert:
(3) In the case of a claim made by a company as a member of a consortium only a fraction of the excess referred to in subparagraph (1) above may be set off under that sub-paragraph, and that fraction shall be equal to that member's share in the consortium, subject to any further reduction under paragraph 6(1) of this Schedule.—[Mr. MacDermot.]

Mr. Diamond: I beg to move Amendment No. 44, in page 67, line 12, to leave out paragraph 7 and to insert:

Companies joining or leaving group or consortium

7. Subject to paragraph 7A below, group relief shall be given if, and only if, the surrendering company and the claimant company are members of the same group, or fulfil the conditions for relief for a consortium, throughout the whole of the surrendering company's accounting period to which the claim relates, and throughout the whole of the corresponding accounting period of the claimant company.

7A.—(1) This paragraph has effect where on any occasion two companies become or cease to be members of the same group.

(2) For the purposes specified below it shall be assumed as respects each company that on that occasion (unless a true accounting period of the company begins or ends then) an accounting period of the company ends, and a new one begins, the new accounting period to end with the end of the true accounting period (unless before then there is a further break under this sub-paragraph), and—

(a) that the losses or other amounts of the true accounting period are apportioned to the component accounting periods on a time basis according to their lengths, and
(b) that the amount of total profits for the true accounting period of the company against which group relief may be allowed in accordance with paragraph 5(1) of this Schedule is also so apportioned to the component accounting periods.

(3) Where the one company is the surrendering company and the other company is the claimant company—

(a) references to accounting periods, to profits, and to losses, allowances, expenses of management or charges on income of the surrendering company, in paragraphs 1 to 4 of this Schedule shall be construed in accordance with sub-paragraph (2) above,
(b) references to accounting periods in paragraphs 6 and 7 of this Schedule shall be so construed (so that if the two companies are members of the same group in the surrendering company's accounting period, they must under paragraph 6 also be members of the same group in any corresponding accounting period of the claimant company),
(c) references to profits, and amounts to be set off against the profits, in the said paragraph 6 shall be so construed (so that an amount apportioned under sub-paragraph (2) above to a component accounting period may fall to be reduced under the said paragraph 6(2)).

(4) This paragraph shall apply with the necessary modifications where a company begins or ceases to fulfil the conditions for relief for a consortium, either as a surrendering company or as a claimant company, as it applies where two companies become or cease to be members of the same group.

Mr. Deputy Speaker (Sir Eric Fletcher): I think that it will be for the convenience of the House to discuss at the same time the Amendments No. 45 and No. 46.

Mr. Diamond: Yes, Mr. Deputy Speaker; I am much obliged.
These Amendments deal with the situation where companies join and leave a group or consortium and have to deal, therefore, with the problem of how to calculate their liability and any reliefs which may be due when all are not members of the jointly owned company for the whole of the relevant accounting period. Amendment No. 44 arises out of a promise which I gave in Committee to reconsider the matter. In view of what the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) has just said, I hope that I did not on that occasion say that it was impossible to meet the views of the Opposition, because we are here meeting them.
Amendment No. 44 extends the right to claim group relief to cases where a company either joins or leaves a group in the course of its own Corporation Tax accounting period or in the course of the Corporation Tax accounting period of the other company concerned, and it provides for an appropriate fractional relief.
4.45 p.m.
The method of providing this relief is on a time basis. When we discussed the matter last time, I suggested that this would, perhaps, be unnecessary because all the joining company had to do was to take out accounts up to or as from the relevant period. But I recognise that this is putting a burden, not an excessive one but a burden none the less, on the company in question. In order to avoid doing that, although it would give a more accurate result than a pure time apportionment, we propose the Amendment in this form in the sure hope that it will meet the views of the Opposition and will lighten the burden on industry, which is what we are anxious to do the whole way through. We hope that it will be accepted as an indication that we wish to move somewhat more away from what the hon. Gentleman described last night as the antithesis between our responsibility to look after the Revenue and his responsibility rather more to look after the interests of business. We want business to prosper. We do not want business men to be unduly hampered. We have also to look after the interests of the Revenue, and we hope that there will be no need in


future years to make adjustments to what we are now proposing.
Amendment No. 45 arises out of Amendment No. 44, making certain consequential provisions of a detailed nature, which are self-explanatory, though I shall be glad to deal with them if the House wishes. There is one point on which I should dwell in discussing Amendment No. 45. Where there is a claim which might be a claim either for group relief or for relief as a member of a consortium, the normal practice—this is the rule we are developing—is that, if one is entitled to relief as a group, that must come first and there is no entitlement in those cases to relief as a member of a consortium. In this particular case, however, in the circumstances covered by the Amendment, we are providing for the option to be given to the taxpayer to decide which method he would prefer, it being clear that, in the early stages, he will not be able to say which suits his circumstances best.
Amendment No. 46 provides that a claim for group relief by any company under the new provisions for relief to members of a consortium must have the consent of the other members of the consortium. All the members are interested in what happens for tax purposes, so it is right that any one of them should be in a position either to agree or to refuse to agree, inasmuch as his share of the profit or loss will be affected. The only way to do it, therefore, is to have not a majority but a unanimous decision.

Mr. Patrick Jenkin: If I have from time to time criticised the Government for their handling of these matters, I would not like that criticism to mask the fact that there are occasions when we unreservedly welcome what they have done. This occasion is one such. The right hon. Gentelman explained the position very clearly, and the only point I make is that the proposal he has put to us was almost inevitable once the Government had decided to accept the consortium concept for group relief purposes, since it was impossible, or very unlikely, that the accounting periods of all the parents of a consortium would be the same, so as to bring the consortium into line with all of them. To split it up on a time basis, which the Government have done, without obliging them to have their separate

accounting periods seems the most sensible way, and we are grateful that the Government have met the case we made in Committee.

Amendment agreed to.

Further Amendments made: No. 45, in page 67, line 30, at end insert:
(3) If claims for group relief are made by more than one claimant company which relate to the same accounting period of the same surrendering company, and—

(a) all the claims so made are admissible only by virtue of paragraph 7A above, and
(b) there is a part of the surrending company's accounting period during which none of those claimant companies is a member of the same group as the surrendering company,
those claimant companies shall not obtain in all more relief than could be obtained by a single claimant company which was not a member of the same group as the surrendering company during that part of the surrendering company's accounting period (but was a member during the remainder of that accounting period).

(4) If claims for group relief are made by a claimant company as respects more than one surrendering company for group relief to be set off against its total profits for any one accounting period, and—

(a) all the claims so made are admissible only by virtue of paragraph 7A above, and
(b) there is a part of the claimant company's accounting period during which none of the surrendering companies by reference to which the claims are made is a member of the same group as the claimant company,
the claimant company shall not obtain in all more relief to be set off against its profits for the accounting period than it could obtain on a claim as respects a single surrendering company (with unlimited losses and other amounts eligible for relief) which was not a member of the same group as the claimant company during that part of the claimant company's accounting period (but was a member during the remainder of that accounting period).

(5) The provisions of this sub-paragraph have effect as respects a claim for group relief made by a company as a member of a consortium, in this sub-paragraph referred to as a consortium claim'—

(a) a consortium claim, and a claim other than a consortium claim, shall not both have effect as respects the loss or other amount of the same accounting period of the same surrendering company, unless each of the two claims is as respects a loss or other amount apportioned under paragraph 7A(2)(a) above to a component of that accounting period, and the two components do not overlap,
(b) in sub-paragraphs (3) and (4) above consortium claims shall be disregarded,
and paragraph (a) above shall take effect according to the order in which claims are made.

No. 46: in page 67, line 45, at end insert:
(2) A claim for group relief by a company as a member of a consortium shall require the consent of each other member of the consortium, notified to the inspector in such form as the Board may require, in addition to the consent of the surrendering company.—[Mr. Diamond.]

Mr. Diamond: I beg to move Amendment No. 47, in page 68, line 11, to leave out paragraphs 10 and 11.
We considered the Amendment in our discussion yesterday.

Amendment agreed to.

Schedule 11.—(AMENDMENT OF CORPORATION TAX ACTS.)

Mrs. Margaret Thatcher: I beg to move Amendment No. 74, in page 70 line 35, to leave out paragraph 2.
The Chief Secretary will remember that when I moved the Amendment in Committee I asked him to reconsider the inclusion of the paragraph in the Bill. I do not think that this is an occasion for me to rehearse the arguments I put forward then. I should be grateful if he could report to the House what he has decided about the Amendment, whether he will propose any changes in a forthcoming Finance Bill, and his conclusions about top slicing and the inconsistencies between last year's Act and his proposals in the Bill as they apply to pension and annuity funds.

Mr. Diamond: I cannot recommend the acceptance of the Amendment. I shall deal with it as simply as I can, but we now move from the absolutely clear and pellucid provisions of the Bill into matters which are somewhat complicated.
The background of the Amendment is that the Life Office's Association has been pressing for a larger allocation of franked income to shareholders, and the corollary is a smaller liability to Schedule F tax on the dividends paid than is the rule under the Bill. We are concerned here with proprietary life assurance companies who must pay out their profits partly to shareholders and partly to policy holders. The problem relates to the allocation of franked investment income. We take the view that in the absence of any guidance to the contrary, and as there is no logic in having anything other than

what we propose, the sensible way of dealing with the matter is to apportion franked investment income in the same way as the company apportions its profits as between those two groups.
That sounds good common sense. There is nothing against it, and that is what is in the Bill. The hon. Lady asked us to look at the matter again and I proposed to receive once more the representatives of the life assurance companies. I was glad to do so, and to hear their representations. But on that issue I am confirmed in the view which we previously held that this is the commonsense way of dealing with the matter. No view has been expressed by any Body—with a capital B—which recommended otherwise, and, therefore, it would be wrong to suggest that we should depart from our previous view.
The hon. Lady reminded me that she referred to certain inconsistencies, which I have also considered. I was the more easily able to consider them in cold print than in the words she used at the time. The inconsistencies have also been considered with the representatives of the association, as a result of which I wrote to its chairman. I shall not quote the whole letter, but perhaps I should repeat these words:
… I understand that the Inland Revenue have decided that the provisions in the Finance Bill and in last year's Finance Act can be interpreted in a way which meets your difficulty.
I thought that it was as well to put that on the record to show the hon. Lady that this is not an insuperable difficulty. The inconsistency arises out of a possible interpretation; that interpretation does not hold the day, and, therefore, there is no need for any alteration.
In those circumstances, I hope that the hon. Lady will feel that we have done the best we can by receiving a deputation, which corroborated what she said in Committee, and to pay full regard to it. Nevertheless, I hope that she will believe that the solution we propose in the Bill is perhaps the better one, and that in those circumstances a great deal would not be achieved by pressing the Amendment.

Mrs. Thatcher: There is clearly a very fundamental difference between us on this. As my right hon. Friend and I


will probably deal with it in three or four years' time, perhaps we had better leave it until then.

Mr. Deputy Speaker: Does the hon. Lady wish to withdraw the Amendment?

Mrs. Thatcher: No, Mr. Deputy Speaker.

Amendment negatived.

Mr. Deputy Speaker: The next Amendment to be considered is Amendment No. 49. I gather that it will be for the convenience of the House if, at the same time, we consider Government Amendment No. 50, Amendment No. 51 in the name of the right hon. Member for Enfield, West (Mr. Iain Macleod), in page 72, line 19, to leave out from 'only' to the end of line 22, and Government Amendments Nos. 52, 53, 54 and 67.

Mr. Diamond: I beg to move Amendment No. 49, in page 72, line 19, after 'shall' to insert 'not'.
We are dealing with a group of Amendments designed to remove certain difficulties which have arisen in connection with the tax treatment of inter-group dividends and inter-group transfers of assets. I again refer to what the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) said last night about our respective responsibilities. He invited us to move towards removing impediments and difficulties in the way of genuine transactions and somewhat away from anti-avoidance provisions.
The background to the Amendments is that dividends paid by a subsidiary to its parent can be paid in full without deduction of Income Tax, but where the dividends exceed what are called the post-acquisition profits—the profits made since the parent company acquired the subsidiary—the tax deducted cannot be set off against the tax for which the company must account when it pays its own dividends.
These limitations were part of the Inland Revenue's defence against dividend stripping, with which the House has been concerned for many years. I think that this is the first time a Treasury Minister has come to the Box to relax the provisions rather than to tighten them. I hope that in the course of the years we shall be seen to have

acted wisely. That is the first part with which these Amendments deal—the transfer of dividends.
5.0 p.m.
The second part relates to the transfer of the assets. If the market value of an asset transferred by a company to a shareholder exceeds the consideration passing, then the excess is to be treated as a distribution and Schedule F Income Tax, which is the relevant tax on distribution, is to be charged as though the dividend had been paid accordingly. This again was a necessary defence against avoidance.
This provision has been criticised as being unnecessarily wide in its application to groups of companies. We have examined the matter very carefully and have concluded that some relaxation can safely be made in both these types of case. Accordingly, the Amendments provide that dividends can be paid without deduction of tax and transfers of assets can be made tax free where both companies are members of the same group.
I should add that this easement does not destroy the protection which is essential to the Revenue in cases where dividend stripping transactions are entered into for avoidance purposes. For example, therefore, it will not have effect where the recipient company is treated as a dealer in securities, and it is necessary to make certain consequential changes in the Capital Gains Tax provisions.
I hope that I have made it clear that the reason for the Amendment is to provide a relaxation which has been urged upon us both by representatives of industry and by the accountancy profession to remove impediments to genuine transactions. We have, we hope, maintained proper protection of the Revenue while at the same time affording the necessary relaxation. The other Amendments all fall into line. I can, of course, give any detail that is required, but I think that, broadly speaking, the explanation I have given is sufficient and I hope that the House will therefore be good enough to give us the Amendments.

Mr. Patrick Jenkin: I am sure that it will not have escaped the notice of the House that Amendment No. 49 is the only Amendment in the whole of the Report stage and Committee stage on


which the two leading names are those of the Chancellor of the Exchequer and my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). This, of course, indicates that this was an Amendment that we tabled in Committee. The Chief Secretary agreed to look at it. We have tabled it again and have been rewarded by having the Chancellor of the Exchequer putting his name at the head of the list of proposers. I shall not say more about it than that. This would also have happened to Amendment No. 50 if we had got it right.
I want to ask in particular about Amendment No. 54. The right hon. Gentleman thinks that this is the first occasion that any Treasury Minister has come to the House to propose what appears at first sight to be a relaxation of the provisions affecting dividend stripping. It was, therefore, right that we on this side of the House should look at the Amendment with extreme care—perhaps cynicism is too strong a word but certainly we went through it very carefully. I should be grateful if the right hon. Gentleman will clear up a doubt which has entered my mind, at any rate.
The background to this lies in Section 65 of the Finance Act, 1965, which dealt with the question of dividends paid out of pre-acquisition profits to a shareholder owning more than 10 per cent. of the particular category of shares concerned. In effect, it is provided, in the case of a company which is not a share-dealing company, that the excess of dividend over what could have been paid out of the current year's profit and what therefore is presumed to be paid out of pre-acquisition profit, is to be treated as capital distribution for the purposes of the Capital Gains Tax. That comes under paragraph (3) of Schedule 7 of the 1965 Act.
This means, therefore, that there is here a liability to Capital Gains Tax in respect of dividend or the relevant distribution which might amount to the whole of it if the company made a loss in the period in question. Amendment No. 54 removes the word "net" from the phrase, "net relevant distribution". At first sight this would appear to be an inevitable corollary, in effect, to what one would have as a result of the removal on grouping notice dividends paid gross.
The question which arose was whether this would mean that the gross dividend would attract the charge for Capital Gains Tax and in what possible circumstances could a company wish to pay the dividend gross if the result were going to be an additional liability to Capital Gains Tax that it might not otherwise have borne. In other words, though, on the face of it, this Amendment looks like a relieving provision, is there not a sting in its tail? The point to make is that this is, of course, as is so much of this amending legislation, retrospective. Paragraph (3) of Amendment No. 54 says:
The said section 65 shall be deemed always to have had effect subject to this paragraph …".
If the effect of the removal of the word "net" from Section 65(3) of the 1965 Act is, in the circumstances of the case, to increase the charge to Capital Gains Tax, this is something that we would look at with a very jaundiced eye. I recognise that it is a fair point to make that companies do not have to elect to have the dividend paid gross, that it is a matter of option. But the right hon. Gentleman will remember that, under the Schedule which deals with grouping notices, a grouping notice cannot take effect in respect of any dividend paid earlier than three months after the date of the giving of the notice. There again, it is difficult to see how the retrospective operation of this provision can have any effect if a notice cannot have been given until this Bill has become law, and the notice itself cannot have any retrospective effect. Are there circumstances in which this retrospective charge could apply?
This is a complicated matter and I am not certain what the effect of the Section can be in the circumstances I have described. I should be grateful to the right hon. Gentleman if, by permission of the House, he could go into this a little more fully and explain, first of all, whether this means that Capital Gains Tax will be charged on the gross amount of the dividends if the company elects that the dividend shall be paid gross and, secondly in what circumstances can this have effect on Capital Gains Tax being charged retrospectively and, if not, what is the purpose of the words in Amendment No. 54:
The said section 65 shall be deemed always to have had effect subject to this paragraph …".


While we welcome the relaxation, if relaxation it be, we would look with some suspicion if it were in the form of a retrospective charge to companies which would not have applied if this provision had not been in the Bill.

Mr. Diamond: The steps in the argument put by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) are perfectly logical as far as they go. The reason for excluding the word "net" is that "gross" shall have effect, and the hon. Gentleman realises the reasons for which a gross dividend should be added back whereas previously the net dividend would have been added back. But to put the whole thing in perspective, I would point out that this provision, not in every single case but in most cases, would be of benefit to the taxpayer, having the effect of reducing Schedule F taxation. The responsibility of the Revenue is to see that those circumstances which are genuine business transactions are assisted while those which are, or may well be, tax avoidances are not assisted. The provisions which we have will apply in that way. In most cases where the new provisions apply, the adjustment will not lead to a capital gains charge.
These Amendments deal with two aspects. One is the Corporation Tax aspect of transfer of dividends and the other is the Capital Gains Tax aspect of transfer of assets at less than full value.
On the first part we have met everybody's possible reasonable desires. On the second part there are many difficulties and complexities and, indeed, pitfalls. I could have handled the matter by saying to the hon. Member for Wanstead and Woodford that we must examine a little more fully the Capital Gains Tax aspect of everything and, therefore, we are not ready to bring forward this year any proposals.
However, I thought it better to bring forward proposals which were wholly satisfactory to the Opposition on Corporation Tax but which might be somewhat less than wholly satisfactory, although beneficial by and large, on Capital Gains Tax, with the further statement that this does not necessarily represent the end of the road concerning assistance on Capital Gains Tax. We would like to examine this further. If adjustments are required

in a year's time we would be glad to make them, but we are not saying that it may not turn out that way.

Mr. Patrick Jenkin: By leave of the House, I would press this again, because the Chief Secretary has not dealt with the precise point. Sub-paragraph (2) of this new paragraph which the Government Amendment 54 comprises deals with Section 65(3) of the 1965 Act. This, as I indicated, is the one which charges to Capital Gains Tax, as Section 65 originally stood, the net amount of the relevant distribution, because it says that it is to be treated as a capital distribution within the meaning of Part III of the Act. If one removes the word "net" it means that it is the gross dividend which now is to come within the charge to Capital Gains Tax. The Chief Secretary has confirmed that.
The question then is whether this can have any retrospective effect. Subparagraph (3) of paragraph 4 says,
The said section 65 shall be deemed always to have had effect subject to this paragraph …".
Then there is the usual provision about adjustments which must be made to take account of this. Yet the grouping notice, under Section 48(3) of the 1965 Act, can only take effect more than three months after the giving of the notice. Therefore, although one's suspicions are aroused that there may be a retrospective charge to a Capital Gains Tax because the amount will be charged on the gross and on the net dividend, it is difficult to see in practice how this could arise. If a grouping notice could not have been given until after this paragraph is enacted, how could this arise? Can the Chief Secretary confirm that there is no possibility of a retrospective charge to Capital Gains Tax? If so, what is the purpose of paragraph 3? Why is this written back to 1965?

Mr. Diamond: The logic and the practical issues involved would lead to the conclusion which the hon. Gentleman wishes to draw, namely, that there is unlikely to be any retrospection. It is difficult to see how it could arise. He has asked me about the effect of particular words. I will give very careful consideration to what the hon. Gentleman said and I will write to him if there is any question of retrospection in the sense that this is


retrospectively adding to the burden of taxation. Retrospectively adding to the relief of the taxpayer is a matter on which he normally presses me very hard, and that may arise. I do not think there is any question of retrospection in the sense of adding to the burden of the taxpayer, but there may be retrospection adding to the relief of the taxpayer. If there is any question of retrospection adding to the burden of the taxpayer I will immediately draw it to his attention.

Amendment agreed to.

Further Amendments made: No. 50, in page 72, line 19, leave out from 'distribution' to end of line 22.

No. 52 in line 40, after 'shall', insert 'not'.

No. 53, in line 40, leave out from 'distribution' to end of line 43 and insert:
(4) If any amount would, but for sub-paragraph (2) or (3) above, be treated as, or as part of, a distribution made in or after the year 1966–67 and would as so treated constitute also the net amount of a relevant distribution within the meaning of section 65 of the Finance Act 1965 (dividend stripping) then, for the purposes o corporation tax in respect of any chargeable gains, that amount shall be treated as if it were a capital distribution (within the meaning of Part III of the Finance Act 1965) received in respect of the holding.
(5) Sub-paragraphs (2) and (3) above shall not affect the meaning of 'distribution' for the purposes of paragraphs 5, 6(1) and 7 of Schedule 17 to the Finance Act 1965 (dividend stripping: relation of distributions to profits), except so far as the said sub-paragraphs (2) and (3) relieve the company from liability to account for income tax otherwise falling under paragraph 5(1) of the said Schedule 17 to he included in a distribution.

No. 54, in line 46, at end insert:

Dividend stripping

4.—(1) Section 65(6) of the Finance Act 1965 (election for treatment of dividends as group income: exclusion of relevant distributions) shall cease to have effect.

(2) Section 65(3) of the Finance Act 1965 (relevant distribution received by a company which is not a dealer: net amount of relevant distribution to be treated as a capital distribution in respect of the holding) shall apply to group income as if in the phrase 'the net amount of the relevant distribution' the word 'net' were omitted.

(3) The said section 65 shall be deemed always to have had effect subject to this paragraph, and there shall be made all such adjustments by way of discharge or repayment of tax as are necessary to give effect to its provisions.—[Mr. Diamond.]

5.15 p.m.

Mrs. Thatcher: I beg to move Amendment, in page 72, line 46, at the end to insert:
(5) The said Schedule 11 shall have effect subject to the following amendments—

(a) after paragraph 3(1) of that Schedule there shall be inserted the following new paragraph:—

'(1A) In the case of any share capital issued before 6th April 1965 which on that date had attached to it a term providing that, if the share capital was redeemed or repaid, a premium shall be payable the amount of the premium shall on redemption or repayment be treated as repayment of capital'.

(b) In paragraph 3(2) of that Schedule for the words 'sub-paragraph (1)' there shall be substituted the words 'sub-paragraphs (1) and (1A)'.
This Amendment concerns the treatment for tax purposes of a premium paid on the redemption or repayment of shares which were issued before 6th April, 1965.
The Chief Secretary will be aware that it was frequently the practice to issue shares such as preference shares on terms that a premium would be paid when those shares were redeemed. For example, a particular class of preference shares may have an issue price of 20s. but a redemption price of 22s. namely, a premium of 2s. per share, when the shares were redeemed.
Before the 1965 Act that premium would have been treated both in fiscal law and in company law as a repayment of capital. The entire payment had the quality of capital both for taxation purposes and for company purposes.
When the 1965 Act came in, the treatment of that premium was altered. It would have been open to the Government at that time still to retain the nature of the premium as capital, in which event it would have been liable to the new Capital Gains Tax. Under the suggested Amendment the premium would still be liable to Capital Gains Tax, but it would retain its quality as a capital payment. However, in the 1965 Act the Government treat the premium on these shares as a distribution by the company. That changed the quality of the payment and it became an income payment liable to have Income Tax deducted from it when it was paid to the shareholder.
This has raised a number of problems for investment trusts which have to keep their capital and income separate. We are suggesting that on the strictly limited number of shares that were issued before 6th April, 1965 the premium should be treated as a capital payment.
There can be no question of my having to meet the argument that a company chose this method of issuing shares in order to avoid a particular tax, because the tax which gave rise to the difficulty was not in existence until 1965. Pre-1965 issues cannot have been made to avoid the Act, which did not come into existence until after that date of issue, and so there can be no question of tax avoidance here.
The 1965 Act has led to very great practical difficulties. Making the premium distribution has meant that one has to decide the precise amount which is liable as income to have Income Tax deducted from it. As the Chief Secretary probably knows, shares are not always issued at the same price. The same share can be issued at different times at different prices, and frequently this is so. Therefore, when it comes to calculating the precise amount of the premium from which tax is to be deducted, it is not possible to identify the issue price with certainty. Indeed, it is not possible to identify it at all.
The company is therefore left with a certain difficulty. If it takes the lowest issue price, in which case one would get the maximum premium and the maximum deduction of tax from the Exchequer's point of view, the person owning the shares can go against the company if he happens to have paid rather more than that for his shares in the first place. If the highest issue price is taken to be that which should be deducted from the repayment price, it would then be an admission by the Revenue that the terms of the Act were virtually unworkable.
That is the simple case where there is an issue at a number of different prices, but there are various other complications which can occur. There may be an amalgamation of two issues of preference shares which were originally issued at different prices. There may be an original issue at a premium followed by a scrip issue at par, or vice versa. There

may be an original issue at a premium followed by an issue of the same class in exchange for shares in another company, and such an issue is presumably deemed to be made at par. It is therefore extremely difficult, if not impossible, for a company to work the rules as they are at present.
A number of the arguments which I have adduced would attach in any case to all shares, but after an Act has been passed companies are deemed to know about it and to alter their plans in accordance with the new law. It is also possible to argue whether they know what the new law is. However, the Amendment refers only to shares issued before the crucial day in April, 1965, and issued with a contract on the part of the company that a premium would be paid on redemption. By these shares, a company becomes contractually liable to pay a premium and there can be no question of its altering its arrangements in accordance with the Act.
I ask the Chief Secretary to consider the Amendment very carefully and for this limited group of shares to treat the premium as a repayment of capital. Last year he was fairly sympathetic to a similar Amendment which related to the interest on bonus issues of debentures made before 6th April, 1965, and the grounds upon which he acceded to our request then was that there could have been no avoidance motive when the security was issued before last year's Budget. The same reasoning applies to this Amendment and we hope that the right hon. Gentleman will consider it very sympathetically.

Mr. Diamond: I consider everything the hon. Lady says very sympathetically. That is my privilege. Apparently, last year I went to the extremes of sympathy and accepted an Amendment—which, I regret to say, I have not reread—relating to debentures. The hon. Lady has been good enough to refresh my memory on that and to say that it was accepted then that there was no question of tax avoidance. Nobody suggests that tax avoidance enters the present argument.
There are two aspects to what the hon. Lady said, first the argument of substance and then the practical difficulties. This is not a question of tax avoidance, but simply a matter of whether a premium


on share redemption is capital because it was regarded by the shareholder as an expectation of an addition to his capital. Everybody knows that a company provides for a premium on redemption of a share out of profits, except where it is provided out of a premium raised at the time of issue of the share, in which case that is put to a premium redemption account. That does not enter into this argument, because what is here being taxed is not the premium at redemption, but the difference between the premium at issue and the premium at redemption. Either that whole amount or part of it is provided out of profits.

Mrs. Thatcher: When an original issue price share is repaid out of profits as it can be, does that change the nature of the repayment from capital to income?

Mr. Diamond: I would not go the whole way with the hon. Lady about that. She has asked whether a different set of circumstances is analogous. That set of circumstances would require very careful consideration and I would probably not agree that it was in any way analogous, but that does not affect my perfectly accurate statement that the difference in the premium which is relevant for these purposes is provided out of profits.
Secondly, the way in which Corporation Tax moves is to say that anything which a shareholder gets out of the company, so long as the subscribed capital remains intact, is not a repayment of capital, but is a distribution—and the word "distribution" rather than "dividend", is used—and is a distribution of something other than capital. If it is not repayment of capital, it is distribution and it is therefore taxable in the ordinary way. I am bound to say that, for those solid reasons, I could not possibly recommend the House to accept the Amendment.
The hon. Lady went on to say that this would land me in certain practical difficulties and she regaled us with a long list of ways in which companies could make life complicated. The Revenue has not yet in practice had one of these diffi-

cult practical cases. That does not mean that we shall not have one, for we may. When we do, I think that no undue difficulty will be found in reaching agreement between Revenue and taxpayer about the way in which to deal with the matter sensibly and to apply the law sensibly to these rather difficult practical cases.

However, if in the administration of the law it is found that there are practical difficulties which cannot be resolved in the way which I have indicated, and which necessitate legislation, we shall produce legislation next year. In the meantime, we have no reason to believe that that will be necessary. Certainly, it is not necessary at the moment and certainly, for the good and solid reasons which I have given, I could not possibly recommend the House to accept the Amendment.

Mrs. Thatcher: By leave of the House, I cannot accept the right hon. Gentleman's argument that because a premium is sometimes paid out of profit, that necessarily changes the nature of the payment from capital to income payment. The premium may be repaid out of capital, in which case, on his argument, it should still have the quality of capital. There is, therefore, clearly a good deal of muddled thinking.
The Chief Secretary has not perhaps had as many practical problems yet because the Revenue is in any event very behind in some of its computations. I have no doubt that even more difficulties will arise in future than have arisen in the past. It will be better if we show our displeasure with the Chief Secretary's reply in the Division Lobby, and I would therefore advise my hon. and right hon. Friends, who seem to have been flooding into the Chamber in the last few moments, to divide the House.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 152, Noes 213.

Division No. 399.]
AYES
[5.33 p.m.


Atkins, Humphrey (M't'n &amp; M'd'n)
Biggs-Davison, John
Bromley-Davenport, Lt.-Col.Sir Walter


Awdry, Daniel
Black, Sir Cyril
Brown, Sir Edward (Bath)


Baker, W. H. K.
Body, Richard
Bruce-Gardyne, J.


Balniel, Lord
Boyd-Carpenter, Rt. Hn. John
Buchanan-Smith, Alick(Angus, N&amp;M)


Bell, Ronald
Braine, Bernard
Bullus, Sir Eric


Bennett, Sir Frederic (Torquay)
Brewis, John
Carr, Rt. Hn. Robert




Cary, Sir Robert
Hill, J. E. B.
Page, Graham (Crosby)


Channon, H. P. G.
Hirst, Geoffrey
Pardoe, John


Ciegg, Walter
Hogg, Rt. Hn. Quintin
Peel, John


Cooke, Robert
Holland, Philip
Peyton, John


Cooper-Key, Sir Neill
Hooson, Emlyn
Pike, Miss Mervyn


Costain, A. P.
Howell, David (Guildford)
Pink, R. Bonner


Craddock, Sir Beresford (Spelthorne)
Hunt, John
Powell, Rt. Hn. J. Enoch


Crosthwaite-Eyre, Sir Oliver
Hutchison, Michael Clark
Prior, J. M. L.


Cunningham, Sir Knox
Irvine, Bryant Godman (Rye)
Pym, Francis


Currie, G. B. H.
Jenkin, Patrick (Woodford)
Ramsden, Rt. Hn. James


Dance, James
Jennings, J. C. (Burton)
Ridley, Hn. Nicholas


Davidson, James(Aberdeenshire, W.)
Johnston, Russell (Inverness)
Ridsdale, Julian


Dean, Paul (Somerset, N.)
Kaberry, Sir Donald
Rossi, Hugh (Hornsey)


Dodds-Parker, Douglas
Kershaw, Anthony
Royle, Anthony


Doughty, Charles
King, Evelyn (Dorset, S.)
Scott, Nicholas


Douglas-Home, Rt. Hn. Sir Alec
Kirk, Peter
Sharples, Richard


Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Kitson, Timothy
Shaw, Michael (Sc'b'gh &amp; Whitby)


Emery, Peter
Lambton, Viscount
Smith, John


Eyre, Reginald
Langford-Holt, Sir John
Steel, David (Roxburgh)


Farr, John
Legge-Bourke, Sir Harry
Stodart, Anthony


Fisher, Nigel
Lloyd, Ian (P'tsm'th, Langstone)
Stoddart-Scott, Col. Sir M. (Ripon)


Fletcher-Cooke, Charles
Lloyd, Rt. Hn. Selwyn (Wirral)
Tapsell, Peter


Fortescue, Tim
Longden, Gilbert
Taylor, Sir Charles (Eastbourne)


Foster, Sir John
Lubbock, Eric
Taylor, Edward M.(G'gow,Cathcart)


Galbraith, Hon. T. G.
McAdden, Sir Stephen
Taylor, Frank (Moss Side)


Gibson-Watt, David
Macleod, Rt. Hn. Iain
Temple, John M.


Gilmour, Ian (Norfolk, C.)
McMaster, Stanley
Thatcher, Mrs. Margaret


Gilmour, Sir John (Fife, E.)
Maginnis, John E.
Turton, Rt. Hn. R. H.


Glover, Sir Douglas
Marples, Rt. Hn. Ernest
van Straubenzee, W. R.


Goodhart, Philip
Maude, Angus
Wainwright, Richard (Colne Valley)


Gower, Raymond
Mawby, Ray
Walker-Smith, Rt. Hn. Sir Derek


Grant, Anthony

Wall, Patrick


Grant-Ferris, R.
Maxwell-Hyslop, R. J.
Walters, Dennis


Gresham cooke, R.
Maydon, Lt.-Cmdr. S. L. C.
Ward, Dame Irene


Hall, John (Wycombe)
Mills, Peter (Torrington)
Webster, David


Hall-Davis, A. G. F.
Mills, Stratton (Belfast, N.)
Whitelaw, Rt. Hn. William


Hamilton, Michael (Salisbury)
Mitchell, David (Basingstoke)
Wills, Sir Gerald (Bridgwater)


Harris, Frederic (Croydon, N.W.)
More, Jasper
Wilson, Geoffrey (Truro)


Harris, Reader (Heston)
Morrison, Charles (Devizes)
Winstanley, Dr. M. P.


Harrison, Brian (Maldon)
Munro-Lucas-Tooth, Sir Hugh
Wolrige-Gordon, Patrick


Harrison, col. Sir Harwood (Eye)
Murton, Oscar
Worsley, Marcus


Harvey, Sir Arthur Vere
Nicholls, Sir Harmar
Younger, Hn. George


Harvie Anderson, Miss
Noble, Rt. Hn. Michael



Health, Rt. Hn. Sir Lionel
Onslow, Cranley
TELLERS FOR THE AYES:


Heath, Rt. Hn. Edward
Orr-Ew'mg, Sir Ian
Mr. Bernard Weatherill and


Higgins, Terence L.
Osborn, John (Hallam)
Mr. Hector Monro.



Osborne, Sir Cyril (Louth)





NOES


Alldritt, Walter
Crawshaw, Richard
Forrester, John


Allen, Scholefield
Crosland, Rt. Hn. Anthony
Fowler, Gerry


Anderson, Donald
Crossman, Rt. Hn. Richard
Fraser, Rt. Hn. Tom (Hamilton)


Archer, Peter
Dalyell, Tam
Freeson, Reginald


Armstrong, Ernest
Darling, Rt. Hn. George
Galpern, Sir Myer


Atkins, Ronald (Preston, N.)
Davies, Dr. Ernest (Stretford)
Garrett, W. E.


Atkinson, Norman (Tottenham)
Davies, G. Elfed (Rhondda, E.)
Ginsburg, David


Bagier, Gordon A, T.
Davies, Ifor (Gower)
Greenwood, Rt. Hn. Anthony


Barnett, Joel
Davies, S. O. (Merthyr)
Gregory, Arnold


Baxter, William
Delargy, Hugh
Grey, Charles (Durham)


Beaney, Alan
Dempsey, James
Griffiths, David (Rother Valley)


Bence, Cyril
Dewar, Donald
Griffiths, Rt. Hn. James (Llanelly)


Bishop, E. S.
Diamond, Rt. Hn. John
Griffiths, Writ (Exchange)


Blackburn, F.
Dickens, James
Hamilton, James (Bothwell)


Blenkinsop, Arthur
Dobson, Ray
Hamilton, William (Fife, W.)


Boardman, H.
Doig, Peter
Hamling, William


Booth, Albert
Dunn, James A.
Hannan, William


Bowden, Rt. Hn. Herbert
Dunnett, Jack
Harper, Joseph


Braddock, Mrs. E. M.
Dunwoody, Dr. John (F'th &amp; C'b'e)
Harrison, Walter (Wakefield)


Brooks, Edwin
Eadle, Alex
Haseldine, Norman


Brown, Rt. Hn. George (Belper)
Edelman, Maurice
Hattersley, Roy


Brown, Hugh D. (G'gow, Provan)
Edwards, Rt. Hn. Ness (Caerphilly)
Henig, Stanley


Brown, Bob(N'c'tle-upon-Tyne, W.)
Edwards, Robert (Bilston)
Herbison, Rt. Hn. Margaret


Brown, R. W. (Shoreditch &amp; F'bury)
Edwards, William (Merioneth)
Horner, John


Buchan, Norman
English, Michael
Howarth, Harry (Wellingborough)


Buchanan, Richard (G'gow, Sp'burn)
Ensor, David
Howarth, Robert (Bolton, E.)


Butler, Herbert (Hackney, C.)
Evans, Albert (Islington, S.W.)
Howie, W.


Callaghan, Rt. Hn. James
Evans, Ioan L. (Birm'h'm, Yardley)
Huckfield, L.


Cant, R. B.
Faulds, Andrew
Hughes, Emrys (Ayrshire, S.)


Carmichael, Neil
Fernyhough, E.
Hughes, Hector (Aberdeen, N.)


Castle, Rt. Hn. Barbara
Finch, Harold
Hughes, Roy (Newport)


Chapman, Donald
Fletcher, Ted (Darlington)
Hunter, Adam


Coe, Denis
Foot, Michael (Ebbw Vale)
Jackson, Colin (B'h'se &amp; Spenb'gh)


Coleman, Donald
Ford, Ben
Jackson, Peter M. (High Peak)


Concannon, J. D.









Janner, Sir Barnett
Morris, Charles R. (Openshaw)
Silkin, Rt. Hn. John (Deptford)


Johnson, James (K'ston-on-Hull, W.)
Moyle, Roland
Silkin, Hn. S. C. (Dulwich)


Jones, J. Idwal (Wrexham)
Murray, Albert
Silverman, Julius (Aston)


Kelley, Richard
Neal, Harold
Slater, Joseph


Kerr, Dr. David (W'worth, Central)
Newens, Stan
Small, William


Kerr, Russell (Feltham)
Noel-Baker, Francis (Swindon)
Spriggs, Leslie


Lawson, George
Noel-Baker, Rt. Hn. Philip(Derby, S.)
Steele, Thomas (Dunbartonshire, W.)


Lee, Rt. Hn. Frederick (Newton)
Ogden, Eric
Strauss, Rt. Hn. G. R.


Lestor, Miss Joan
O'Malley, Brian
Swain, Thomas


Lever, Harold (Cheetham)
Oram, Albert E.
Swingler, Stephen


Lewis, Arthur (W. Ham, N.)
Oswald, Thomas
Symonds, J. B.


Lewis, Ron (Carlisle)
Owen, Dr. David (Plymouth, S'tn)
Thomson, Rt. Hn. George


Lipton, Marcus
Owen, Wilt (Morpeth)
Tomney, Frank


Lomas, Kenneth
Padley, Walter
Tuck, Raphael


Loughlin, Charles
Paget, R. T.
Urwin, T. W.


Luard, Evan
Palmer, Arthur
Wainwright, Edwin (Dearne Valley)


Lyon, Alexander w. (York)
Panned, Rt. Hn. Charles
Walker, Harold (Doncaster)


Lyons, Edward (Bradford, E.)
Park, Trevor
Wallace, George


McCann, John
Parkyn, Brian (Bedford)
Watkins, David (Consett)


MacColl, James
Pavitt, Laurence
Watkine, Tudor (Brecon &amp; Radnor)


MacDermot, Niall
Pearson, Arthur (Pontypridd)
Wellbeloved, James


Macdonald, A. H,
Pentland, Norman
Wells, William (Walsall, N.)


Mackenzie, Gregor (Rutherglen)
Perry, Ernest C. (Battersea, S.)
White, Mrs. Eirene


Mackie, John
Price, William (Rugby)
Whitlock, William


Mackintosh, John P.
Probert, Arthur
Willey, Rt. Hn. Frederick


McMillan, Tom (Glasgow, C.)
Rankin, John
Williams, Alan Lee (Hornchurch)


McNamara, J. Kevin
Rees, Merlyn
Williams, Clifford (Abertillery)


MacPherson, Malcolm
Rhodes, Geoffrey
Williams, Mrs. Shirley (Hitchin)


Mahon, Peter (Preston, S.)
Richard, Ivor
Williams, W. T. (Warrington)


Mallalieu, E. L. (Brigg)
Roberts, Albert (Normanton)
Willis, George (Edinburgh, E.)


Manuel, Archie
Robertson, John (Paisley)
Wilson, Rt. Hn. Harold (Huyton)


Mason, Roy
Robinson, Rt. Hn. Kenneth (St.P'c'as)
Wilson William (Coventry, S.)


Mayhew, Christopher
Rogers, George (Kensington, N.)
Woodburn, Rt. Hn. A.


Millan, Bruce
Robinson, W. O. J. (Walth'stow, E.)
Woof, Robert


Miller, Dr. M. S.
Sheldon, Robert
TELLERS FOR THE NOES:


Mitchell, R. C. (S'th'pton, Test)
Shinwell, Rt. Hn. E.
Mr. Alan Fitch and


Morgan, Elystan (Cardiganshire)
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Mr. Neil McBride.


Morris, Alfred (Wythenshawe)
Short, Mrs. Renée(W'hampton, N.E.)

Schedule 12.—(SUPPLEMENTARY AND ADDITIONAL PROVISIONS WITH RESPECT TO SELECTIVE EMPLOYMENT TAX.)

Mr. MacDermot: I beg to move Amendment No. 61, in page 81, line 41, to leave out 'section 25' and to insert 'Part IV'.
It would also be convenient if we took with this Amendment No. 62.
These Amendments are consequential upon the addition of Clause 26 to the Bill and they extend to employers under that Clause the arrangements for the "set off" payments which apply to employers under the S.E.T. Act and Clause 25 of the Bill.

Amendment agreed to.

Further Amendment made: No. 62, in page 81, line 44, leave out 'section 25' and insert 'Part IV'.

Mr. Iain Macleod: I beg to move Amendment No. 63, in page 82, line 5, at the end to insert:
15. The Minister by whom any register of establishments is maintained under section 7(1) of the principal Act shall not refuse to exercise his power by virtue of section 10(3)(a) of that Act to register a part of an employer's business as a separate establishment by reason only of the fact that the persons employed on

the part of the employer's premises proposed to be treated as the site of that establishment are supervised by a person working in some other part of those premises.
It was around midnight on Thursday, 8th June, that my hon. Friend the Member for Woking (Mr. Onslow) embarked on the saga of two dental practices in his constituency and the fate of the dental technicians attached thereto when steps were taken to ascertain whether a refund or premium was payable in respect of them under the Selective Employment Tax. The reply of the Parliamentary Secretary to the Ministry of Labour was received by us on this side with a mixture of hilarity and horror. We therefore thought that we should return, however briefly, at the end of the Report stage to a very important matter of principle. We said some rough and some kind things to the hon. Gentleman. I should be delighted one day to see him become Minister of Labour—and I cannot pay him a higher tribute than that—perhaps after a decent interval of 13 years' of Conservative Goverment. I have a high regard for his ability, although I think that his answer was sadly wrong on 8th June.
I outline the case very briefly. A dental surgeon in Woking had a dental


technician and decided to apply for the premium. Being, presumably, a friendly sort of chap, he notified the other practice in Woking which had two dental technicians, and accordingly both practices put in for the relief. Somewhat to their surprise, they were told that the practice with two dental technicians was allowed the relief, and the practice with one technician which had originated the idea was not.
The matter was taken up with the Minister of Labour who wrote a letter to my hon. Friend the Member for Woking, which included the following words:
As one person only is employed in the dental workshop, the inference is that he is supervised by the partners who control the practice as a whole. If it can be shown that this is not the case, for example, that the technician is self-supervising, I would be prepared to reconsider my earlier decision. Where on the other hand more than one employee is working in an establishment it is open to the employer to establish that one worker is supervised by the other and that the 'separately organised' test is satisfied".
That is a delicious comment. A number of similar examples were given by my hon. Friends the Members for Ormskirk (Sir D. Glover) and the Cities of London and Westminster (Mr. John Smith).
In reply, the Parliamentary Secretary said at the beginning of his speech—with a completely straight face, as far as I can make out:
The two examples which hon. Members have put to the Committee both arise naturally, inevitably and properly out of the workings of Section 10(3,a) of the Selective Employment Payments ACt."—[OFFICIAL REPORT, 8th June, 1967; Vol. 747, c. 1447–9.]
There must, of course, be rules in this matter and the hon. Gentleman went on to consider the criteria which had been used by the Ministry of Labour. They are three: first, the activities must be genuinely different in kind; secondly, they must be carried out in separate parts of the establishment; and, thirdly, the two activities must be separately organised. In other words, he raised the spectre of repercussions which is the standard answer which one is accustomed to getting when one presses a particular point.
The hon. Gentleman said.
Its application as a general principle would erode the basic establishment rule on which the

tax is based."—[OFFICIAL REPORT, 8th June. 1967; Vol. 747, c. 1451.]

Mr. John Peyton: Would my right hon. Friend repeat that?

5.45 p.m.

Mr. Macleod: It is a terrible thing to repeat, but I will repeat it if my hon. Friend wishes:
Its application as a general principle would erode the basic establishment rule on which the tax is based.
Later, my hon. Friend the Member for Woking tabled a Written Question to the Ministry of Labour in which he asked
how many applications he"—
that is, the Minister of Labour—
has received for dental surgeons' establishments to be divided so that a single technician may qualify for selective employment premium; and how many of these he has approved".
The Answer was:
Twenty-nine, of which two have been approved."—[OFFICIAL REPORT, 26th June, 1967; Vol. 749, c. 11.]
Perhaps the Parliamentary Secretary will say—because his Answer does not make it clear—whether the other 27 have been rejected, or whether some have been rejected and others, as may well be the case, are still under consideration.
I am convinced that the real trouble springs from a point which was put by my hon. Friend the Member for the Cities of London and Westminster. He said:
These cases are not decided on their merits but by reference to this standard industrial classification which was devised for quite another purpose. The Government have got hold of this bed of Procrustes and are going to stamp us all into it the old, the disabled, and so on, whether we fit it or not"—[OFFICIAL REPORT, 8th June, 1967; Vol. 747, c. 1453.]
It is within my knowledge that that is exactly true, because the Standard Industrial Classification was revised in 1958 when I was Minister of Labour. It was revised as a statistical exercise. The Director of Statistics, Mr. Fowler, an extremely able and most distinguished man in his field—I think that he is still with the Ministry—naturally did most of the work on it.
I can best illustrate the point by making a short quotation from the introduction to the Standard Industrial Classification which came into such unexpected prominence with the introduction of the


Selective Employment Tax a year ago. It is stated in paragraph 8(c) on page 2:
Thus establishments repairing radio and television sets, watches and clocks, furniture, etc., are classified to the distributive trades. Establishments engaged in the repair of ships, locomotives, aircraft, and most kinds of plant and machinery are classified to manufacturing industry. In a few cases repair work is not classified to either manufacturing or distribution. Establishments engaged in the repair and maintenance of buildings are included in Construction. In the cases of motor repairing and boot and shoe repairing the repair activities, … are … treated as industries in themselves …".
The point is—and the Parliamentary Secretary will basically agree with this—that that makes absolute sense in considering statistical classification. It makes absolute nonsense for taxation purposes. It was never devised for such purposes. There was never the faintest intention that it should be used for those purposes. The Treasury was so busy that it had to sub-contract the work to the Ministry of Labour. This is why these cases arise and why we have proposed the Amendment. Hence all the fiddles about being self-employed. My hon. Friend the Member for Ormskirk was right to suggest in Committee that probably even this case could have been got round if the dental surgeon had given a special title to the dental technician.
The Ministry of Labour, in its adminisstration of these matters, has been generally absolutely excellent. I should like to put that clearly on record. I have had many illustrations of how wise, as one would expect, and sympathetic its officials have been in the inevitable difficulties which have arisen. But that does not alter the fact that occasionally examples which appear to be and are idiotic emerge, and it is such an example that we are discussing. I am sure that the Parliamentary Secretary would know from even a brief experience of administration that it is possible for each step to be O.K. and defensible in itself and yet for the end product to be ludicrous. As I made clear in Committee, there is a special responsiblity on him to exercise his position as a Minister, particularly because this matter fell under the Guillotine a year ago and was not discussed by Parliament.
The Parliamentary Secretary said, unusually and rather patronisingly, that we

did not understand our Amendment. With respect, we do. It is only a peg on which to hang an argument, and I am sure that the hon. Gentleman is a good enough Parliamentarian to realise that. What we seek to do could be done without an Amendment at all, if I could convince him that I was right and he was wrong, but this is a Parliamentary way of enabling the House to discuss the matter.
I do not expect him to stand up in a white sheet and announce that he has sinned, although I believe that he has, but I do expect him to go away and be a little more sensible in future about these sorts of matters. If he gives the same sort of reply as he gave in Committee, in all friendliness to him, I shall regard his case as hopeless. However high he may rise in the present Government, he will always be a prisoner, because he will not have realised the fundamental distinction in the work which a Minister has to do. If he is wise, he will reflect closely on what has been said both in Committee and on Report, not just about the particular instance, although it is the one on which the Amendment hangs, but about the working and the difficulties of the S.E.T. and, with the splendid record which his Ministry has for administering what is almost an impossible task, in my view he ought to take special care to see that the small absurdities, of which this is clearly one, should be removed as well.

Mr. Peyton: I had no intention of making any contribution to the proceedings today, but I have been so moved by the utterances of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) that I must do so.
It is most extraordinary that the Government should confess that a man cannot supervise himself. It must be something out of their own subconscious. It is the whole ground for the exemption that where one man is on his own, it is clear that he cannot supervise himself. I take it that that is something which the Parliamentary Secretary believes, and it is probable that the belief is shared widely in the Government. It is obvious to us all that the Prime Minister is wholly incapable of supervising himself, but I will not pursue that now.
My right hon. Friend quoted the splendid phrase,
arise naturally, inevitably and properly out of the workings
of the Section. I doubt whether anything could be said to arise naturally from something so unnatural. It is true that something could arise inevitably, but certainly not properly. There is nothing natural or proper about the whole of this tax and, after the bitter experience which the hon. Gentleman has had with it, he should be the last person to be surprised by things arising unnaturally and improperly. I only wish that everything which arises from it could be avoided.
Then my right hon. Friend quoted the phrase,
Its application as a general principle would erode the basic establishment rule.
I wonder how often such classic words have been quoted. These sorts of sentences can only be conceived and born in the ivory tower of the Establishment, that rarified world where no common sense is allowed to break in and where the totally indefensible has to be maintained at all cost.
I share the sentiments expressed by my right hon. Friend about the way in which the Ministry of Labour has done this impossible job. I do not see why it is, when we possess perhaps the finest Civil Service in the world, that we should seek to prove it always by giving it the most impossibly silly tasks. In showering upon it impossible tasks of a silliness which is quite monumental, the present Government have exceeded the efforts of their predecessors, and I am bound to say that their predecessors have not been guiltless in this respect.
We are confronted here with a singularly foolish consequence of a completely idiotic tax. It is a proposal which has been pursued with a folly at which one can only wonder, even in the light of experience of the last two years of the present Administration.
My right hon. Friend drew attention to the fact that, in trying to get this tax on its legs at all, the Government were forced to cast round into all sorts of unlikely nooks and crannies for some legislative materials with which to build it. If Noah had been faced with the task of building the Ark in a hurry in a treeless land, he

would not have had a more difficult or onerous responsibility to discharge.
No words of mine would be capable of encompassing the folly. I believe that the nice, cautionary tale of the dental mechanic who, in the view of the Government, was unable to supervise himself and whose employer was therefore deprived of his premium, is a good example of the sort of quagmire into which we are plunged by such foolish experiments. I wish only that I had words adequate enough to describe it.

Sir Douglas Glover: I felt that we had reached the point of absurdity when I saw the Parliamentary Secretary to the Ministry of Labour sitting on the Treasury Bench presumably waiting to reply to the debate, because he is always put up when there is an impossible case to answer.
I will not go over the arguments which have been put forward before, but I hope that the hon. Gentleman and his Ministry will realise that we are dealing with an Amendment which is only a peg on which to hang our argument and which discloses a complete nonsense in the working of the S.E..T
As my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said, it all starts from the fact that the Government were in a panic to find a new tax, the Chancellor having decided not to put any more on whisky or cigarettes and made a great oration in the House. Suddenly, the Chancellor had to think of some other way of raising money, but he found that it was too complicated to deal with himself, and pitched it over to the Ministry of Labour. Heaven knows what that Ministry said when it got it. That has never been disclosed in public and probably was not printable in Parliamentary language.
However, being good loyal members of the Government, they took on the task. They started off with a premise which was untenable, because they began with these lists of classifications which were not designed for the purpose. That is what has led the Government into nonsense after nonsense.
The tax has now been in operation for 12 months. We accept that, when they were bringing it in last year, perhaps they could not refine it, and so on.


But that was 12 months ago. As these cases of absurdity are shown up, it is time that the Government did something about it.
6.0 p.m.
I do not know whether my hon. Friend the Member for Woking (Mr. Onslow), who raised this point about the two dental technicians in a brilliant speech in Committee, will be able to tell the House that this single dental technician has been put into the category of being able to draw a premium. If he has not, I think that the Government are going round the bend. It is obvious that these two dentists, one with two technicians, and the other with one, with all three technicians carrying out the same job, ought to have the same conditions. It is Bumbledon gone mad to say that nothing can be done to put the matter tight. Of course, something can be done to put it right. As I said in Committee, I am sure that the Ministry could suggest to the dentist concerned how he could put it right, and tell him what classification he ought to give this technician to put the matter right. I hope that the Parliamentary Secretary will tell us that the matter has been righted.
To diverge for a moment to what was said by my hon. Friend the Member for Yeovil (Mr. Peyton), thank heaven that the Prime Minister is not covered by a premium for the work he does. If there is one person in the country who does not earn a premium at the moment it is the Prime Minister, but if I pursue this I might get out of order. I do not think that he comes under S.E.T. at all.

Mr. Peyton: Surely my hon. Friend would not describe the Prime Minister as a service industry?

Sir D. Glover: I would describe the Prime Minister—[AN HON. MEMBER: "As a fabricator."]—either, as one of my hon. Friends says, as a fabricator—

Mr. MacDermot: Monstrous.

Sir D. Glover: Even at this late stage one ought to have a little sense of humour. I would describe him either as that, or as a person running a non-movable business, where turnover is nil, and production is a minus quantity, but I think that this is getting a little out of order.
I ask the Government—and I mean this seriously—to go into this matter to see that these nonsenses are put right. Do the Government realise that this makes it almost impossible for a one-man firm to run a manufacturing business, because he is bound to be supervising himself? How do firms start in business? Most firms are inclined to start as one-man businesses and build themselves up. Why should they, because of some classification, be at a disadvantage against somebody who can say that he is employing staff and is supervising and is therefore treated as a manufacturing industry?
The whole thing is so crazily stupid that I do not know why it was necessary for us to table this Amendment. I am surprised that the Government did not accept it in Committee and say that they would do something about it and put the matter right. This is Bumbledon and bureaucracy gone mad, and the sooner the Government do something about it the better it will be for the efficiency of the nation.

Mr. Cranley Onslow: I must apologise for not being here when the debate started, but I understand that the circumstances underlying the particular case which first prompted me to table a similar Amendment in Committee have been outlined, and I shall not go over them again.
I would like to comment briefly on one or two points which were made by the Parliamentary Secretary when he replied to the debate on 8th June. I shall pass over the "naturally, inevitably, and properly" line which he attempted to sell us, and forbear to comment on the statement that Clause 10(3,a) is intended to help industry, and proceed to two of the hon. Gentleman's remarks at the end of his short speech on that occasion.
The first of these, which the hon. Gentleman seemed to regard as his strong argument, was:
I hope that he will accept that very many single individual establishments have been so classified."—[OFFICIAL REPORT, 8th June, 1967; Vol. 747, c. 1451.]
I do not know why I am always reluctant to accept at face value statements made from the other side of the House. I confess this to be a weakness, but on this occasion I yielded to it and tabled a Question to the Ministry of Labour on


16th June to find out how many there had been, and I was told—and if this has been referred to I make no apology for quoting it again—
The Ministry has received about 350 applicants for an establishment to be divided so that a single employee may qualify for Selective Employment premium or refund. About 90 of these have been approved and the remainder rejected.—[OFFICIAL REPORT, 16th June, 1967; Vol. 748, c. 155]
I do not know the Parliamentary Secretary's ideas of magnitude, but in the context of the total employed population of this country I do not regard 90 as very many, nor even as many. I am not sure that I even regard it as being a few. I regard it as being very, very, very few, and how he has the gall to rely on a statistical argument as flimsy as this passes my comprehension. But perhaps he was being rather pompous on that occasion, and if he is not feeling quite so pompous today no doubt he will drop the argument.
The hon. Gentleman then said:
I hope that he will also understand that if the Ministry lays down rules and establishes criteria we have an obligation to stick to those criteria and to hang on to those rules."—[OFFICIAL REPORT, 8th June, 1967; Vol. 747, c. 1451–2.]
It was rather as though he was a small child hanging on to his blanket. I would like the Parliamentary Secretary to explain what these criteria are and precisely what is this rule blanket on to which he is hanging so tight for such comfort as he can get from it. How widely are these criteria and these rules known? I would like a definition again of this interesting term "self-supervising" which was first thrown out in the Minister's original letter to me, and to which my hon. Friend the Member for Yeovil (Mr. Peyton) has drawn attention.
It may be that the Parliamentary Secretary is self-supervising, although judging by his present companions on the Front Bench it does not seem that on this occasion he is allowed to be. The hon. Gentleman may stick to all the criteria that he likes, and hang by all the rules that he wishes, but I suggest to him that he ought to make sure that the public understand these criteria and these rules because the Government have a duty to the public to explain the rules by which they believe themselves to be bound.
What guidance has been given to local offices of the Ministry of Labour about these rules and criteria Have they been specifically informed? What guides the Minister when he comes to make these decisions? We know that the local offices of the Ministry of Labour are very helpful, but the Minister should see that they are able to be even more helpful, and I hope, therefore, that in respect of the dental technicians he will tell us what rules and criteria the two successful applicants have been able to satisfy which the 25, or 27 other unsuccessful applicants have been unable to meet.
Have their employers been informed? Have they been given an opportunity to reapply? My own constituent who first brought this case to public notice is still trying to draft his letter of reapplication because he really cannot understand what is going on, and being a busy man, he does not have much time to devote himself to these abstruse matters. He has had no guidance, and he cannot understand how it is that somewhere in the United Kingdom there are two dental technicans working single-handed under such conditions that they can supervise themselves and qualify for the premium, but that by the same token there are ten times that number who are unable to satisfy these conditions whatever they may be. The same comment applies to all the other unsuccessful applicants. Out of 350, 90 have been successful. Have the others been told how they might yet succeed if they reapply?
If the hon. Gentleman will not yield on this absurd provision as it is now stuck in our legislation, I hope that he will at least understand that if he wishes this idiotic tax to achieve its secondary purpose—which he defined on 8th June as being the redistribution of employment resources between manufacturing and service industries—it is in his own interest to do something about this particularly ridiculous situation.
We know that the prime purpose of this tax was to get the Chancellor of the Exchequer off the hook because of his pre-election statement that there would be no severe increase in taxation, but if we address ourselves to the secondary purpose, to secure redeployment, then if these single applicants who have so far not been successful in applying for the receipt of premium were somehow or


other, to be enabled to receive it, the hon. Gentleman would be able to claim that they had been redeployed into a productive sector of industry. Because they would now appear statistically on the manufacturing side of the ledger, having teen transferred statistically from the "non-productive" service side of the ledger.
Of course, it would only be on paper, and they would still be doing just the same jobs, but it would enable the hon. Gentleman to come to the House and say that the Selective Employment Tax was achieving its purpose and to say, "Lo and behold, here are men moving from one side to the other, and this justifies this remarkable piece of fiscal legislation". Perhaps such a solution is too absurd even for him to contemplate, though I would not put too much faith in that proposition.
I would only put this to him. He can prate as long as he likes about eroding rules, and he can attempt as much and as stoutly as he wishes to avoid any deflation of his ego, but much the most sensible course which he could adopt would be to accept this Amendment, or better still, to scrap the whole tax.

Mr. John Smith: I should like, briefly, to support this Amendment for two reasons, first, because, as I mentioned in Committee, there are two rather comparable cases in my constituency, and, secondly, because I do think that it raises a very important human point.
I should like to comment on one or two things which the Joint Parliamentary Secretary said when he answered the debate in Committee. I have no wish to go for the Joint Parliamentary Secretary—I have never had the opportunity before. Indeed, when the "Week in Westminster", on the "steam radio", took the form of a monologue, which now it no longer does, the hon. Gentleman, if I may say so, was very much the best at it among those on that side of the House; but what he said in Committee in answer to the Amendment by my hon. Friend the Member for Woking (Mr. Onslow) was, I think, deplorable.
Among other things the hon. Gentleman said that
… the two activities must be separately organised … which … means that they can be separately identified in the employer's

records and are separately managed and supervised."—[OFFICIAL REPORT, 8th June, 1967; Vol. 747; c. 1450.]
We are talking here about tiny enterprises, enterprises of one, two or three people, and in such enterprises—and we all know some—the idea of separately identifying things in the employers' records and showing they are separately managed and supervised bears no relation to the conditions under which such firms work. They work off the backs of envelopes and they work very cheaply as a result.
The hon. Gentleman also talked about "eroding the establishment rule", a phrase which, to me, is extremely provoking. He talked about the "enormous technical complication" of charging "on an individual rather than establishment basis"—two words, in my view, put in exactly the wrong order of priority.
Finally, the hon. Gentleman said to my hon. Friend the Member for Woking that the example my hon. Friend had given "was numerically small". I am reminded by that of the definitions current before the war of various form of government in terms of cows, with which the House will be familiar. There was New Dealism: "You have two cows; the Government shoot one, buy the milk from the other and pour it down the drain". There was Fascism: "You have two cows; the Government shoot you and take both cows". And so on. But the definition for Whitehallism was: "You have two cows; the Government say that this is too few to count".
That is the principle which we are fighting here. The Government are giving many signs that they are not sincerely concerned with the individual, still less with the individual enterprise, and I feel that their attitude to individuals and to small enterprises will be judged very much by their attitude to this Amendment.

6.15 p.m.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley): The right hon. Gentleman the Member for Enfield, West (Mr. lain Macleod) was so generous to me in his opening remarks that it is with genuine regret that I have to warn him that he may well be as disappointed this afternoon as he was on the last occasion when I addressed myself to this subject. I


think that he is sad, but not surprised. Because of his generosity it is even more painful for me to have to point out at the outset two mistakes in his speech.
The first was his denunciation of the Standard Industrial Classification, which he described as totally irrelevant to the task which it is intended to perform in regard to the Selective Employment Tax. In fact, I have to tell him that the Standard Industrial Classification is totally irrelevant to this debate. If the problem exists in the terms in which he described it this evening, if the problem exists in the rather more dramatic terms which were used by the hon. Member for Woking (Mr. Onslow), it exists in exactly the same way even if the two activities under discussion come under different headings of the classification or different groups. I hope, therefore, that the right hon. Gentleman will understand that that rather omnibus criticism of the tax was really entirely mistaken.
I hope that he will also understand that the sort of job which he did this evening was, in the past, better done by the hon. Member for Worcestershire, South (Sir G. Nabarro). In a complex system of taxation it is, invariably, easy to pick on marginal cases, and those marginal cases can be so explained and so expounded and so discussed as to make the entire rule look fatuous.
I believe that what we have to decide this evening is whether the basis of the rule is right, and whether the rule is applied accurately. It is freely acknowledged, and I am sure my hon. and right hon. Friends at the Treasury will acknowledge as well, that most complex systems of taxation do have at their margins cases which can be argued, by those who choose to do so, in the way the case has been argued this evening. I freely confess, and this may be a little comfort to the right hon. Gentleman, that I understand why the hon. Member for Woking brought the case before us two or three weeks ago. Bu I do not think that his case invalidates the rule, and I do not think that the arguments he brought forward justify a change. I understand very well how a case of that sort at the margin provokes the sort of interest and the sort of debate, and, perhaps, the rather overheated sort of debate, we have had twice on this subject, on this Section 10(3,a).
I will try to answer some of the questions asked this evening. I think the actual nub of the problem was pointed out, perhaps unwittingly, by the hon. Gentleman the Member for Ormskirk (Sir D. Glover), who said that in his view everybody, carrying out the same sort of job, should receive the tax back in the same way. I am sure he knows perfectly well that the principle on which the entire Selective Employment Tax is based is quite opposite to that. The tax is dependent upon the establishment principle; that everybody in one establishment receives the rebate, receives the premium, or pays the tax in toto.
If this were to be operated in the way the hon. Member suggests we would, of course, be in this position—and I take this example at random: say, the British Motor Corporation would receive the premium only for those people directly engaged in manufacturing activity, but it would not receive the premium for clerks and for other similar people. It would then be received according to the nature of the job. The hon. Gentleman is probably rising to say that that is the way it should be, but I hope that he will understand, in terms of this debate and in terms of this Amendment, that we have an obligation, in part to the House and in part, I think, to logic, to realise that we are debating the details of the tax. We are not embarking for 40 minutes this evening on rewriting or altering or abolishing the tax. What we must consider is that the Amendment attacks the principles which were accepted by the House last year and have been confirmed by the House since.
Let me try to explain how Section 10(3,a) is intended to help industry. Section 10(3,a) enables firms with two separate and distinct activities to be classified for purposes of the tax in two separate and distinct ways. But if the major activity already qualifies for premium, there is no split between the two activities. Then the entire organisation receives the premium—major activity which qualifies and minor activity alike.
Only when a firm argues that it is organised in two separate activities, the major one of which does not qualify for premium and which therefore, were it to be classified as one unit, would prohibit anyone in the firm from qualifying for the premium, are the powers of


Section 10(3,a) exercised. The establishment is notionally split into two separate units, thus enabling the firm, under those specific circumstances, to obtain premium payment for its minor activity.
Thus, the Section is in the interests of firms, because, whenever it is applied, a firm gets a premium payment which it would not get if Clause 10(3,a) did not exist. That is why it is to their advantage and why it was generally welcomed by industry when it was put in the Bill. If we are to say that it is reasonable and proper, as I believe it is, that separate activities should, on these specific occasions and in these specific senses, be separately classified, it is equally proper to say, as hon. Gentlemen opposite have said today, that it is important for British industry—firms which are likely to apply for the split to be operated in their favour—to know exactly how the distinction is made and how they are classified in separate establishments.
I was astonished to hear the hon. Member for Woking ask when these rules had been spelled out and when we had explained our criteria for making the division. My right hon. Friend the Minister of Labour explained this to the House on 23rd June, 1966. If the hon. Gentleman wants to confirm that, since he has some scepticism about assurances from this side, he may care to look at columns 934–5 of HANSARD for that date. It was reaffirmed and the rules redefined by my hon. and learned Friend the Financial Secretary on 9th August, 1966; that appears in column 862.
Both speeches included a statement of the three criteria and those criteria, as outlined by my right hon. Friend and my hon. and learned Friend on those occasions, have since been incorporated into the S.E.T. Guide. It is, of course, available at local employment exchanges to members of the public who want to understand exactly what the rule stands for. It has been available during the whole period of the Section's operation.
There is no case for saying that Parliament was not informed or that industry does not know what the three criteria are. However, since the hon. Member for Woking apparently does not know, let me tell him. They are, first, that the activities should and must be different in kind; second, that they should be car-

ried out in a separate part of the premises, and, third, that they should be separately organised. Since—I freely acknowledge this—"separately organised" is a rather vacuous concept, we went on to define what it meant and said that they must be separately identified in the firm's records and separately managed and supervised.
When I told the House at midnight on that previous occasion that the Government had an obligation to hang on to these rules, I did not mean that the Government would fall but that the rules would fall if we let go. We are hanging on to preserve the rules, because, having established and publicised them, we have a duty to tell the public and the House that these, the rules which we publicised and laid down, are the rules by which we abide.
With all respect to the right hon. Member for Enfield, West, if my right hon. Friend were exercising his right under this paragraph to divide establishments into two activities capriciously and arbitrarily, without the guidance of rules and without consistency or pattern, the right hon. Gentleman would be the first to rise and complain that there was no rhyme, reason, pattern or consistency. There are all those things and we have an obligation to stick to them—

Mr. Onslow: I am pleased to hear that the country is so flooded with copies of statements by right hon. and hon. Gentlemen in HANSARD and elsewhere, but I ask the hon. Gentleman to consider that this may still not be adequate. Particularly, would he say whether the local offices of the Ministry are equipped with a definition of "self-supervising", a term which the Minister used in his original letter to me? Is he satisfied that the employers of the 27 dental technicians who are not qualified to receive this premium are aware of the terms which enabled the two successful applicants to get premiums?

Mr. Hattersley: That is a different point, to which I will come, but I am glad that the hon. Gentleman no longer pursues the claim that the criteria are not known in the country. At least we are on common ground in saying that there is no doubt as to what the criteria are.
We should remember that, during the debate to which I have referred on 4th August, the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) chose, from the Opposition Front Bench, specifically to go on record against the prospect of Section 10(3,a) being operated without rules being made public, without the House knowing the criteria, and without pattern or consistency. What we are doing, and what we are being castigated this evening for doing, is operating the rules consistently and according to the pattern.
I hope that the House will agree that, if there have to be rules which determine whether establishments can be legitimately separated, these criteria are reasonable. They are a simple but substantial test of whether the two activities are genuinely separate, although operated under the same roof. I hope that the House will also understand that, as we come to consider the application of these rules, we do it in as sensible and practical a way as possible.
Of course we accept—[Laughter.] The hon. Member for Ormskirk laughs. Since he chooses to interrupt, let me tell him this. During the so-called "midnight debate", he put to me the problem of one of his constituents, about whom he had already written to my Ministry, and asked me to judge those facts there and then. I did so, and, because I felt that I owed it to the hon. Gentleman, I also examined the case on my return to the Ministry.
What I found was that the details as outlined by the hon. Gentleman on that occasion were incorrect in every particular. It is a matter for him and his conscience, and perhaps his constituent's, to judge the accuracy with which he advances cases in the House. But if he puts up a case which proves on examination to be absolutely inaccurate, our general belief in his right to comment on these matters must be—if I may use a term which causes more offence than it should—eroded.
As I was saying before the hon. Gentleman diverted my attention, of course we accept the concept of self-supervision. Of course some of the 90 people whom he was told are already receiving the benefits of this paragraph are, because of their

self-employment (I use that term in the loosest sense, to signify that they are working on their own) judged to be self-supervising. But he will recall, from the case which he presented to the Ministry, that one of the dental practitioners was clearly, in this case, supervising a technician. Had it been self-supervision, the payment would have been possible. But this case was not advanced. The case advanced is that one of the partners was directly responsible for the supervision of the mechanic's work, and, by making that concession—as the hon. Gentleman's constituent honestly, reasonably and honourably did—he is, of course, conceding that the man's supervision is not a separate activity.
Therefore, in those terms, we must judge, if we are sticking to the rules and the stipulations announced to the House and the country, that it is not a separate establishment—

Mr. Onslow: I assure the hon. Gentleman that it is not within my knowledge that any statement that one of the partners was in fact supervising the technician had been made, and there is no mention of that in my correspondence with the Ministry, although the information might have been passed in some other way. I have been told that the information in the two cases was substantially similar and that, in the second case, as two technicians were employed, it was open to their employer to establish that one was supervising the other.

6.30 p.m.

Mr. Hattersley: The two cases are similar to a degree but are not totally similar. In the case of the establishment to which premium has already been paid there was no need for one of the technicians to be self-supervising because he had the senior technician to carry out that supervising function. The hon. Gentleman says that there was nothing to his knowledge about self-supervision but, as I remember, the letter from my right hon. Friend which both the hon. Member for Woking and the right hon. Member for Enfield, West quoted, made specific reference to self-supervision, so that the concept was clearly in his mind. We had explained to the hon. Member's constituent that self-supervision was possible and that self-supervision qualified, and we


told him that if that was the case in his establishment he would receive the premium.

Mr. Onslow: Will the Parliamentary Secretary give way?

Mr. Hattersley: No. I think that I have been at least generous to the hon. Gentleman, and I do not want to intrude further on the lime of the House.

Mr. Onslow: On a point of order, Mr. Speaker. Is it open to the Minister to misquote by inference an exchange already reported in the columns of the OFFICIAL REPORT? The document is there, and I should like to read it to the hon. Gentleman.

Mr. Speaker: I am not sure what a misquotation by inference is, but it is not a point of order.

Mr. Hattersley: I may say that I was reinforced in quoting it by the nodding agreement of the right hon. Member for Enfield, West, and although it was a paraphrase I hope that I was quoting with a degree of accuracy.

Mr. Onslow: The words in question are:
As one person only is employed in the dental workshop"—
that is the place in question—
the inference is that he is supervised by the partners who control the practice as a whole. If it can be shown that this is not the case, for example, that the technician is self-supervising …".—[OFFICIAL REPORT, 8th June, 1967; Vol. 747, c. 1447.]
Those are words which came originally from the Minister, not from me.

Mr. Hattersley: I agree. Those are the words and they came originally from the Minister and not from the hon. Gentleman.
I should like to say just two things in defence of Section 10(3,a), which concern the benefits which it undoubtedly confers. There have been many hundreds of successful applicants who, in general, have applied for the benefit on dividing their establishments into two parts, and receiving premium for one part. As the right hon. Gentleman accurately said, 90 establishments have obtained premium for single persons, operating as a single unit. I could give many examples of the benefits offered to industry in this way. I hope

that the House will continue to believe that if we are to continue to make this provision available, as I am sure we must, we must go by some precise publicised rules.
That is all that Section 10(3,a) claims to do. That is the only reason why I oppose the Amendment. I acknowledge that the right hon. Gentleman may think that this case is marginal, and that the final paragraph of the letter which has been so much quoted concedes that it is a marginal case. But I hope that he and the House will understand that such cases arise from a complicated taxation system, and that it would be absurd to throw away the entire concept of the tax because such marginal hard cases exist.

Mr. Iain Macleod: By leave of the House, Mr. Speaker, I will reply very briefly. With respect, I think that the Parliamentary Secretary is wrong to say that the Standard Industrial Classification is irrelevant to the case. It is from that Standard Industrial Classification that the conception of division between service and manufacture comes, and that the conception of the unit of establishment comes. All these matters are quite clearly relevant to the case now before us.
I repeat that something absolutely sensible, and which was plainly sensible for statistical purposes, makes little sense 10 years later when used for taxation proposals—

Mr. Hattersley: I am sure that the right hon. Gentleman will concede that if there was any other split between services and manufacturing, if there were something other than the Standard Industrial Classification, no matter how precise and tailor-made, the sort of problem we have this evening might well arise.

Mr. Macleod: With respect, that does not follow. The Government, being pressed for time, had to accept this classification of 10 years ago. If they had started from the beginning they could have produced their own qualification for this purpose, and then some of these absurdities would not have arisen.
The Parliamentary Secretary has, as usual, replied with considerable skill to what is, I think, a very difficult debate, but, after all, what his reply amounts to is that the Act is complicated, as it is, and that there must be rules, as there


must. But then he goes on to say, to paraphrase him, that that is bound to throw out some nonsenses and that we should not be too surprised if this is one of them. This is the issue between us. I do not accept that Ministers should passively agree that nonsenses can be thrown up because of sticking to rules that may be all right for the generality

of cases. I therefore think that we ought to vote on the matter now, and I hope that the dental technicians of Woking will haunt the Parliamentary Secretary's dreams.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 137, Noes 196.

Division No. 400.]
AYES
[6.36 p.m.


Atkins, Humphrey (M't'n &amp; M'd'n)
Hall-Davis, A. G. F.
Page, Graham (Crosby)


Awdry, Daniel
Hamilton, Michael (Salisbury)
Pardoe, John


Baker, W. H. K.
Harris, Frederic (Croydon, N.W.)
Peel, John


Balniel, Lord
Harris, Reader (Heston)
Peyton, John


Bell, Ronald
Harrison, Brian (Maldon)
Pike, Miss Mervyn


Bennett, Sir Frederic (Torquay)
Harrison, Col. Sir Harwood (Eye)
Pink, R. Bonner


Biggs-Davison, John
Harvey, Sir Arthur Vere
Powell, Rt. Hn. J. Enoch


Birch, Rt. Hn. Nigel
Harvie Anderson, Miss
Prior, J. M. L.


Black, Sir Cyril
Heald, Rt. Hn. Sir Lionel
Pym, Francis


Body, Richard
Heath, Rt. Hn. Edward
Ramsden, Rt. Hn. James


Boyd-Carpenter, Rt. Hn. John
Higgins, Terence L.
Ridley, Hn. Nicholas


Braine, Bernard
Hill, J. E. B.
Ridsdale, Julian


Bromley-Davenport, Lt.-Col.Sir Walter
Hirst, Geoffrey
Rossi, Hugh (Hornsey)


Brown, Sir Edward (Bath)
Hobson, Rt. Hn. Sir John
Royle, Anthony


Bruce-Gardyne, J.
Holland, Philip
Scott, Nicholas


Bullus, Sir Eric
Howell, David (Guildford)
Sharples, Richard


Cary, Sir Robert
Hunt, John
Shaw, Michael (Sc'b'gh &amp; Whitby)


Clegg, Walter
Hutchison, Michael Clark
Smith, John


Cooke, Robert
Irvine, Bryant Godman (Rye)
Steel, David (Roxburgh)


Cooper-Key, Sir Neill
Jenkin, Patrick (Woodford)
Stodart, Anthony


Costain, A. P.
Johnston, Russell (Inverness)
Stoddart-Scott, Col. Sir M. (Ripon)


Craddock, Sir Beresford (Spelthorne)
Kaberry, Sir Donald
Taylor, Sir Charles (Eastbourne)


Crosthwaite-Eyre, Sir Oliver
King, Evelyn (Dorset, S.)
Taylor, Edward M.(G'gow,Cathcart)


Cunningham, Sir Knox
Kirk, Peter
Taylor, Frank (Moss Side)


Currie, C. B. H.
Kitson, Timothy
Temple, John M.


Dance, James
Langford-Holt, Sir John
Thatcher, Mrs. Margaret


Davidson, James (Aberdeenshire, W.)
Longden, Gilbert
Thorpe, Rt. Hn. Jeremy


Dean, Paul (Somerset, N.)
Lubbock, Eric
Turton, Rt. Hn. R. H.


Dodds-Parker, Douglas
McAdden, Sir Stephen
van Straubenzee, W. R.


Doughty, Charles
Macleod, Rt. Hn. Iain
Wainwright, Richard (Colne Valley)




Walker-Smith, Rt. Hn. Sir Derek


Elliott, R.W. (N'c'tle-upon-Tyne, N.)
McMaster, Stanley
Wall, Patrick


Emery, Peter
Maginnis, John E.
Walters, Dennis


Farr, John
Maude, Angus
Ward, Dame Irene


Fletcher-Cooke, Charles
Mawby, Ray
Weatherill, Bernard


Fortescue, Tim
Maxwell-Hyslop, R. J.
Webster, David


Galbraith, Hon. T. G.
Maydon, Lt.-Cmdr. S. L. C.
Whitelaw, Rt. Hn. William


Gibson-Watt, David
Mills, Peter (Torrington)
Wills, Sir Gerald (Bridgwater)


Gilmour, Ian (Norfolk, C.)
Mills, Stratton (Belfast, N.)
Wilson, Geoffrey (Truro)


Gilmour, Sir John (Fife, E.)
Mitchell, David (Basingstoke)
Winstanley, Dr. M. P.


Glover, Sir Douglas
Monro, Hector
Wolrige-Gordon, Patrick


Goodhart, Philip
Munro-Lucas-Tooth, Sir Hugh
Worsley, Marcus


Gower, Raymond
Murton, Oscar
Younger, Hn. George


Grant, Anthony
Nicholls, Sir Harmar



Grant-Ferris, R.
Noble, Rt. Hn. Michael
TELLERS FOR THE AYES:


Gresham Cooke, R.
Onslow, Cranley
Mr. Jasper More and


Griffiths, Eldon (Bury St. Edmunds)
Orr-Ewing, Sir Ian
Mr. Reginald Eyre.


Hall, John (Wycombe)
Osborne, Sir Cyril (Louth)





NOES


Alldritt, Walter
Booth, Albert
Concannon, J. D.


Allen, Scholefield
Bowden, Rt. Hn. Herbert
Conlan, Bernard


Archer, Peter
Braddock, Mrs. E. M.
Crawshaw, Richard


Armstrong, Ernest
Brooks, Edwin
Cronin, John


Atkins, Ronald (Preston, N.)
Brown,Bob (N'c'tle-upon-Tyne, W.)
Crosland, Rt. Hn. Anthony


Atkinson, Norman (Tottenham)
Brown, Hugh D. (G'gow, Provan)
Crossman, Rt. Hn. Richard


Bagier, Gordon A. T.
Brown, R. W. (Shoreditch &amp; F'bury)
Dalyell, Tam


Barnett, Joel
Buchan, Norman
Darling, Rt. Hn. George


Baxter, William
Buchanan, Richard (G'gow, Sp'burn)
Davidson, Arthur (Accrington)


Beaney, Alan
Butler, Herbert (Hackney, C.)
Davies, Dr. Ernest (Stretford)


Bence, Cyril
Callaghan, Rt. Hn. James
Davies, G. Elfed (Rhondda, E.)


Binns, John
Cant, R. B.
Davies, Ifor (Gower)


Bishop, E. S.
Carmichael, Neil
Davies, S. O. (Merthyr)


Blackburn, F.
Chapman, Donald
Delargy, Hugh


Blenkinsop, Arthur
Coe, Denis
Dempsey, James


Boardman, H.
Coleman, Donald
Dewar, Donald




Diamond, Rt. Hn. John
Jones, J. Idwal (Wrexham)
Price, Thomas (Westhoughton)


Dickens, James
Kelley, Richard
Price, William (Rugby)


Dobson, Ray
Kerr, Dr. David (W'worth, Central)
Probert, Arthur


Doig, Peter
Kerr, Russell (Feltham)
Rankin, John


Dunn, James A.
Lawson, George
Rhodes, Geoffrey


Dunnett, Jack
Leadbitter, Ted
Richard, Ivor


Dunwoody, Dr. John (F'th &amp; C'b'e)
Lestor, Miss Joan
Roberts, Albert (Normanton)


Eadie, Alex
Lewis, Ron (Carlisle)
Robinson, Rt. Hn. Kenneth (St.P'c'as)


Edwards, Rt. Hn. Ness (Caerphilly)
Lomas, Kenneth
Robinson, W. O. J. (Walth'stow, E.)


Edwards, Robert (Bilston)
Loughlin, Charles
Rogers, George (Kensington, N.)


Edwards, William (Merioneth)
Lyon, Alexander W. (York)
Sheldon, Robert


Ensor, David
McCann, John
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Evans, Albert (Islington, S.W.)
MacColl, James
Short, Mrs. Renee(W'hampton,N.E.)


Faulds, Andrew
MacDermot, Niall
Silkin, Rt. Hn. John (Deptford)


Fernyhough, E.
Macdonald, A. H.
Silkin, Hn. S. C. (Dulwich)


Finch, Harold
Mackenzie, Gregor (Rutherglen)
Slater, Joseph


Fitch, Alan (Wigan)
Mackie, John
Small, William


Fletcher, Ted (Darlington)
Mackintosh, John P.
Snow, Julian


Foot, Michael (Ebbw Vale)
McMillan, Tom (Glasgow, C.)
Spriggs, Leslie


Ford, Ben
McNamara, J. Kevin
Steele, Thomas (Dunbartonshire, W.)


Forrester, John
MacPherson, Malcolm
Swain, Thomas


Fraser, Rt. Hn. Tom (Hamilton)
Mahon, Peter (Preston, S.)
Swinglor, Stephen


Freeson, Reginald
Mallalieu, E. L. (Brigg)
Symonds, J. B.


Galpern, Sir Myer
Manuel, Archie
Thomas, George (Cardiff, W.)


Garrett, W. E.
Mason, Roy
Thomson, Rt. Hn. George


Greenwood, Rt. Hn. Anthony
Millan, Bruce
Tinn, James


Gregory, Arnold
Morgan, Elystan (Cardiganshire)
Tomney, Frank


Griffiths, David (Rother Valley)
Morris, Alfred (Wythenshawe)
Tuck, Raphael


Griffiths, Rt. Hn. James (Llanelly)
Morris, Charles R. (Openshaw)
Urwin, T. W.


Griffiths, Will (Exchange)
Moyle, Roland
Wainwright, Edwin (Dearne Valley)


Hamilton, James (Bothwell)
Murray, Albert
Walker, Harold (Doncaster)


Hamilton, William (Fife, W.)
Neal, Harold
Wallace, George


Hamling, William
Newens, Stan
Watkins, David (Consett)


Harper, Joseph
Noel-Baker, Francis (Swindon)
Watkins, Tudor (Brecon &amp; Radnor)


Harrison, Walter (Wakefield)
Noet-Baker, Rt. Hn. Philip (Derby, S.)
Wellbeloved, James


Haseldine, Norman
Ogden, Eric
Wells, William (Walsall, N.)


Hattersley, Roy
O'Malley, Brian
Whitlock, William


Henig, Stanley
Oram, Albert E.
Willey, Rt. Hn. Frederick


Herbison, Rt. Hn. Margaret
Oswald, Thomas
Williams, Alan Lee (Hornchurch)


Horner, John
Owen, Dr. David (Plymouth, S'tn)
Williams, Clifford (Abertillery)


Howarth, Robert (Bolton, E.)
Owen, Will (Morpeth)
Williams, W. T. (Warrington)


Howie, W.
Padley, Walter
Willis, George (Edinburgh, E.)


Huckfield, L.
Paget, R. T.
Wilson, Rt. Hn. Harold (Huyton)


Hughes, Emrys (Ayrshire, S.)
Palmer, Arthur
Wilson, William (Coventry, S.)


Hughes, Hector (Aberdeen, N.)
Pannell, Rt. Hn. Charles
Woodburn, Rt. Hn. A.


Hughes, Roy (Newport)
Park, Trevor
Woof, Robert


Hunter, Adam
Parkyn, Brian (Bedford)



Jackson, Peter M. (High Peak)
Pavitt, Laurence
TELLERS FOR THE NOES:


Janner, Sir Barnett
Pearson, Arthur (Pontypridd)
Mr. Charles Grey and


Jones, Dan (Burnley)
Pentland, Norman
Mr. Ioan L. Evans.


Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Perry, Ernest G. (Battersea, S.)

Schedule 13.—(CAPITAL GAINS.)

Mr. Diamond: I beg to move Amendment No. 64, in page 85, line 32, at the end to insert:

Exchange of shares and securities under nationalisation Acts: short term gains

12. For the purposes of paragraph 11 of Schedule 9 to the Finance Act 1962 (conversion of securities not to involve any disposal of the old holding or any acquisition of the new holding) 'conversion of securities' shall include any exchange of securities effected in pursuance of the Iron and Steel Act 1967 or any other enactment (including an enactment passed after this Act) which provides for the compulsory acquisition of any shares or securities and the issue of securities or other securities instead.

This Amendment is a relieving provision which I am sure will prove acceptable to the House. The background is that under the short-term gains tax of 1962 it was provided that where there was a conversion of shares on a reorganisa-

tion that was not to count as a disposal. When we had the Capital Gains Tax, 1965, broadly the same provision was made, but it was added that where there was such a compulsory conversion on nationalisation there also it did not count as a disposal of the shares, but the earlier provisions had not included that fine point.

So we have the slight anomaly under which, no contemplation of a nationalisation measure having been taken at the time of the 1962 short-term gains tax provisions, if we did not do anything about it there would be a disposal of shares arising on vesting day concerning the nationalisation of steel.

The whole House wants the nationalisation of steel to go through smoothly. Nobody, I am sure, desires that on vesting day the compulsory acquisition of shares should be regarded as a disposal


and should give rise to a short-term Capital Gains Tax. Accordingly, this Amendment is proposed so as to include the same provision as in the Capital Gains Tax itself and to remove the question of liability arising on the disposal of shares on vesting day under steel nationalisation.

Amendment agreed to.

Schedule 16.—(REPEALS.)

Amendments made: No. 66, in page 103, line 31, column 3, leave out '(2)'.

No. 65, in page 106, line 24, column 3, at beginning insert:
'In section 10 subsections (3) and (6)'.—[Mr. MacDermot.]

No. 67, in line 26, column 3, at end insert 'Section 65(6)'.—[Mr. Diamond.]

Bill to be read the Third time Tomorrow and to be printed. [Bill 293.]

Orders of the Day — ADEN, PERIM AND KURIA MURIA ISLANDS BILL

Considered in Committee.

[Mr. SYDNEY IRVING in the Chair]

Clause 1.—(RELINQUISHMENT OF SOVEREIGNTY OVER ADEN, PERIM AND KURIA MURIA ISLANDS.)

6.50 p.m.

The Deputy Chairman: The first Amendment selected is Amendment No. 1, with which we may discuss the following Amendments: No. 2, in page 1, line 5, after 'day', insert 'or days'.
No. 3, in page 1, line 5, after 'may', insert 'severally'.
No. 4, in page 1, line 6, after 'day")', Insert:
'but not before the independence of the Federation has been secured against external attack'.
No. 5, in page 1, line 6, after 'day")', Insert:
'but not before public order is secured'.
No. 6, in page 1, line 8, after 'day' insert 'or those days'.

6.50 p.m.

Mr. Philip Goodhart: I beg to move Amendment No. 1, in page 1, line 5, to leave out from 'On' to the second 'the' in line 6 and insert '3rd November 1968'.
I hope that no one in the Foreign Office has done much research into the political, religious or social significance of the date, 3rd November, because I do not not believe that there is any. It merely happens to be my birthday. I consider myself to be a friend of the people of South Arabia and so it seemed to me appropriate that as a birthday present we should offer them independence on that date.
The purpose of the Amendment is plain. It is to delay independence, the date of which has already been announced as 9th January. I do this because it seems to me that the Government's timing is dangerous. Aden is part of the Arab world and it must be plain that the whole Arab world is still suffering from concussion after the short, sharp blow of the Israeli war.
Before the Israeli war broke out, the British interest in Aden was clear. We


had substantial investments in the Persian Gulf area. They seemed to be threatened by President Nasser, and he also seemed to be threatening the Federal Government of South Arabia, which was the Government with which we had chosen to work. Under those circumstances, we obviously could not let down our friends without the danger of doing damage to our own interests.
But the events of the past few weeks have thrown doubt on exactly who our friends are in the area and what the position is likely to be in a matter of months. Everything is now in question. Will the South Arabian Federal Government be threatened by outside pressures at the beginning of 1968? We do not know at the moment. Shall we have a national rather than just a humanitarian interest in the maintenance of law and order in Aden after 1968? I expect that we shall, but at the moment everything is open to doubt, and this is the precise moment the Government choose to make a definite date for withdrawal, and to offer precise means of help to meet a threat which is at present uncertain.
Since the Foreign Secretary made his speech last week, new and tragic factors have intervened. We still do not know very much about the events that led to the mutiny and the breakdown of law and order in Aden. I very much hope that there will be a full inquiry at the earliest possible opportunity, and that there will be the fullest statements. But on the evidence that has already been produced it seems that the Foreign Secretary's speech on Monday of last week did not have much to do with sparking off the explosion. South Arabia is quite capable of blowing itself up without any assistance from the Foreign Secretary.
Only a small part of the Federal forces seems to have been involved in the mutiny and disturbance. But it would be idle to deny that there is considerable doubt about the loyalty of substantial sections of the Federal forces. There are responsible people who believe that in the recent past one of the main sources of the supply of arms for the terrorists in Aden has been the Federal Army. There is a danger, as we have seen, that rapidly expanding Federal forces will tend to come apart in a welter of tribal jealousies. There are known to be many supporters of the National Liberation Front in the

Army, and it is possible that they too will turn on their Government. There is a possibility that some of the States now in the Federation will secede, whether de factor or de jure, from the Federation.
Before Monday and Tuesday last week it was possible to hope that these problems would not come home to roost before independence if we got out quickly enough. It could be argued that a swift evacuation and hand-over would bring everyone to his senses and make the many different and hostile elements in Aden and South Arabia work together. But the evidence of last week's uprising suggests that this is no longer a valid argument. I believe that the Federal Government now need more time before independence to re-establish their influence.
There is also the question of ascertaining public opinion in Aden which arises with the introduction of the Hone-Bell Constitution that the Foreign Secretary announced. Some of my Liberal colleagues tabled an Amendment, which has not been selected, arguing in favour of a referendum to ascertain public opinion in Aden. I am not against referendums as such in certain circumstances. But just look at what is happening in Aden at the moment! In the crowded district of Crater we are watching a referendum now—a referendum of terror. What is being counted is not ballots and people's opinions but bombs and bullets. We stand aside while the acting mayor of Crater is kidnapped and rival gangs fight together in the streets.
During our withdrawal from the British Empire, and particularly in parts of India and Palestine, local law and order broke down just before independence and the withdrawal of British forces, but I do not know of any other occasion when we have stood aside and tolerated a breakdown of law and order months before independence came into effect. I do not want to see British troops go back into the alleyways of Crater to be shot at and perhaps not allowed to use sufficient force to fight back. What I want to see is law and order restored and I want to see that done by the Federal forces if they can, because this, at least, offers them an opportunity to restore their own morale, to restore their prestige and to prove themselves in the eyes of their own countrymen and


the world at large. If they should fail to restore law and order in Crater, that would be the time for everyone to think again and try to reach a new solution.
It was plain even before last week's events that the Government's timing in this matter was, to put it mildly, unusual. Events since then have proved that their timing is dangerous. I hope that, even this evening, they will accept at least the spirit of the Amendments.

7.0 p.m.

Lord Balniel: In your wisdom, Mr. Irving, you have suggested that a wide range of Amendments be taken together, six in all, covering a variety of different aspects of the problem. I shall, in referring to them, compress my remarks so far as I can. First, I take the series of Amendments which tie the relinquishment of British sovereignty over Aden, Perim and the Kuria Muria Islands not so much to a date as to the conditions prevailing in the Colony, in particular, the Amendment which would lay down that independence should not be granted until such time as there is security against external aggression and the Amendment which would lay down that independence should not be granted until such time as law and order have been established in the Colony.
We understand from the Foreign Secretary's speech 10 days ago that the Colony is to be granted independence on 9th January, 1968. Constitutional freedom is meaningless unless there is freedom against external aggression and freedom for the ordinary individual to live in conditions of normal law and order. Constitutional freedom has no meaning unless it is accompanied by freedom from fear, from external aggression and from the destruction of normal life in the community.
In the past 10 days, there has been a dramatic reversal of policy by the Government. They have, in practice, accepted the agreement which was reached by my right hon. Friend the Member for Streatham (Mr. Sandys) as long ago as 1964. At that time, he reached agreement with the Federal Government that the Colony should move forward to independence in 1968 but, at the same time, its independence would be accompanied by an agreement to secure the independent Federation against external aggression. The Government's decision

in the last 10 days has been to accept the substance, if not entirely the formality, of what my right hon. Friend agreed in 1964. I heard the Foreign Secretary on television yesterday describe the agreement which he had reached with the Federal Government as a guarantee for the independent Federation against external aggression.
What has happened since 1964, and what necessitates these Amendments, is that there have been a number of changes, all for the worse. There has been a great deal of blood spilt. The Constitution in operation when my right hon. Friend reached that agreement has been suspended, and there is now no democratic Constitution in effect in Aden Colony. The normal processes of law and order have been suspended, and jury trial is no longer possible. On a number of occasions, various national groups, F.L.O.S.Y. and the N.L.F., have, apparently, gained the upper hand over the responsible authorities, and, as my hon. Friend the Member for Beckenham (Mr. Goodhart) reminded us, in the past few days the area of Crater has been no longer under the control of the established authority.
In these circumstances, in considering the move towards independence, the House would be mistaken to imagine that, as a result of the debacle which has overcome President Nasser's armies in Sinai, we can reasonably expect to see a reduction in the amount of armed subversion from the Yemen. This is not the likely course of events during the coming months. Indeed, the opposite is more likely. President Nasser is more likely to try to recoup his prestige and recover from the disaster which has overtaken his armies by achieving some compensating triumph in the south.
We are not likely to see a withdrawal of the 30,000 or 40,000 Egyptian troops present in the Yemen. Moreover, Presirent Nasser's prestige in the Middle East has not primarily depended upon the military might which he wielded. It has, perhaps, to a larger degree depended upon his control of the broadcasting media, his control of Radio San'a and Radio Cairo. It is worth noting that General Talat Hassan, the Egyptian commander-in-chief in the Yemen, announced over San'a Radio, on 11th June, after the events in Sinai, that the Egyptians would continue to carry out their sacred


mission to defend the Yemen revolution. During the next few months, the final stages as Aden moves towards independence, we can reasonably expect a redoubling of the subversion which has taken place in the past.
Yesterday, I heard the Foreign Secretary say also—I quote his words as best I can—that "our rôle in the Middle East is not a rôle which should be played with ships, guns and battalions". This is a surprising statement when one bears in mind the actions which he has taken in the past 10 days. I read in the evening papers today that a further 250 British troops are being dispatched to Aden. The defence backing which the Foreign Secretary has decided to place behind the independent Federation of South Arabia is massive indeed. He has decided to supply the Federal Army with modern arms. It is to be supplied with the recoilless rifle in place of the old Lee Enfield rifle. A British military mission is to be established to assist the Federal Army, and not only is it to give guidance but it is to man the system of communications and base maintenance. The right hon. Gentleman has announced that eight Hunter fighters are to be provided for the independent Federation and that we are to finance, over the next two years, the two battalions of Hadhrami Bedouin Legion.
In addition to these provisions for the defence of the Federation, the Foreign Secretary has announced—as the Government always do when they reach a moment of crisis—that an aircraft carrier is to be provided, and that it will cruise in the locality for six months following independence with its aircraft deployed ready to defend the Federation if necessary. Then, most dramatic of all, there has been the statement by the Foreign Secretary that a force of V-bombers is to be based for an indefinite period of time on the Island of Masirah.
I recount these steps which the Foreign Secretary has taken only because, in the turmoil in which the Middle East is involved at present, the situation is so uncertain that it is impossible, not only for the Opposition, but also for the Government, ro make any firm judgment as to whether these military steps are an over-insurance or whether they will prove to be inadequate. It is for these reasons that my hon. Friends have tabled these

Amendments, which would tie the date of independence more to the conditions in the Colony of Aden at the time of independence than to any specific date, because the Government's plans, as they stand at the moment, are to grant independence on 9th January, irrespective of the conditions which apply, irrespective of whether Aden is subjected to attack, and irrespective of the internal security situation.
I turn now to the Amendment dealing with internal security. One day following the debate on Second Reading there was the appalling disaster of the mutiny of the Federal Army and the tragic consequences for British troops which flowed from that mutiny, and which flowed, I think, from a misunderstanding by the police of the situation.
Could the Minister of State give some information about the internal security situation? We read in the paper today that in the last 24 hours seven people have been kidnapped, including the Chairman of the Aden Municipal Council. We understand—this is no more than rumour—that they have been interrogated, a word which is all to often used as a rather terrible euphemism. The rumour continues to the effect that they have been put to death. I should like to ask whether this is true and whether the report that 30,000 rounds of ammunition have been stolen by the terrorist organisation is true.
The major question I want to put to the Minister of State is whether it is the intention to re-enter the Crater area. On a number of occasions in the past my right hon. and hon. Friends and myself have urged the Government to consider whether it would not be desirable that internal security for those areas where non-Europeans live should be handled by the Federal forces. We have urged that the internal security of the Crater area and of the Sheik Othman area should be undertaken by the Federal forces. I should like to ask whether this, which has also been requested by the Federal Ministers, is the present intention of the Government; or is it the intention that British troops should re-enter the Crater area and try to restore law and order themselves?
My second question concerns the use of the weapons which lie in the hands of British troops. My hon. Friend the


Member for Tynemouth (Dame Irene Ward) tried to move the Adjournment of the House today on this issue. My hon. and gallant Friend the Member for Lewes (Sir T. Beamish) has also asked questions about this. Can we have an assurance that the troops will be allowed to use the weapons which are necessary to ensure that they are not subjected to excessive risks? We recognise that we ask any troops involved in an internal security situation of this kind to undergo certain risks, but it is right that we should seek an assurance from the Government that our troops are not being asked to take excessive risks.
7.15 p.m.
I did nearly all my military service in a situation somewhat similar to that which exists in Aden at the moment. My military service was during the last days of the Palestine Mandate. I do not deny that I have been rather concerned to read in The Times today the following report concerning the steps which were taken to enter a building in the Crater area:
No British troops went into Crater. No shots were fired. Argyll and Sutherland Highlanders guarding Marine Drive, used by Mr. Owen to enter Crater, had orders not to shoot even if fired upon.
Is this the correct position? We certainly do not wish British troops to use any excessive force, but we insist that British troops are not subjected to excessive risks in implementing internal security in the area.
The purpose of the other series of Amendments is to ensure that separate Orders in Council are required when we are relinquishing the sovereignty of the three separate territories covered by the Bill—Aden, Perim and the Kuria Muria Islands. Under the Bill, as drafted, all these three territories have to be covered by one Order in Council. All have to move forward to independence at the same time, irrespective of the outcome of consultation with the local people, and irrespective of the ultimate destiny of these three territories.
The Government have indicated that they cannot foresee how events are likely to work out during the next seven months. It is right to emphasise that the Government are taking these territories forward to independence in almost unique circum-

stances. Indeed, I can think of no similar circumstances, except when I refer back to the final days of the Palestine Mandate.
It has always been one of the prides of the British Commonwealth that democratic constitutions should be established in our Colonies before they are brought forward to independence. It has also been one of our prides that these territories are granted independence with viable economies. It has also been one of our prides that, on achieving independence, our territories are strong enough to resist external aggression.
In all these respects a question mark certainly hangs over the Government's policy. The Government have themselves indicated that each territory is liable to have a different destiny. On Second Reading the Under-Secretary, when asked about the future of the islands, said this:
… there are certain problems about the precise future of these territories after independence … We have not yet undertaken any formal consultations with the inhabitants, which we will obviously have to do before deciding their precise destination."—[OFFICIAL REPORT, 19th June, 1967; Vol. 748, c. 1265]
I should like the Minister of State to give some indication as to the form of consultations which are to take place in the Island of Perim and in the Kuria Muria Islands; and also perhaps, although I fully understand—

Mr. Deputy Speaker: Order. I think that the hon. Gentleman is out of order in raising this matter on these Amendments.

Lord Balniel: With respect, Mr. Irving, I fully appreciate that we are to refer to the Island of Perim in a subsequent debate, but the point I am trying to make now is that the ultimate destiny of the island is not necessarily in the Federation, and this is my argument for three separate Orders in Council. If you will allow me to develop my theme, I think that you will find that I shall remain in order.
I was asking the Minister of State to indicate what form of consultation has taken place and also to explain why it is so obviously necessary to have consultation in the islands while not equally necessary to have consultation in the Colony of Aden itself. I fully understand the point made by my hon. Friend the Member for Beckenham (Mr. Goodhart)—that it is not possible because of the


internal security situation to consult with the local population in Aden—but I should like an explanation from the Government.
It is worth pointing out that two of the territories to which we are giving independence are not at the moment members of the Federation and that there is nothing in their history which would lead us to believe that they would wish to become members of the Federation. The Kuria Muria Islands lie not off the coast of the Federation but off the coast of the Sultanat of Muscat. Indeed, in 1854, the Sultan of Muscat ceded the sovereignty to Britain. So far remote are these islands from Aden Colony that, although they are technically members of the Colony, their administration in the past has always been undertaken by the British Resident in the Persian Gulf and not by the Aden Colony Administration.
It is also worth pointing out that, ethnically, the people do not belong to the same tribes which will come to form the Federation, so it is at least possible, after consultation with the local population, that they will wish to be associated more with the Sultanate of Muscat and Oman than with the Federation.
The same situation arises for the Island of Perim. It is in a position of immense strategic significance. As you yourself have pointed out, Mr. Irving, subsequently in this Committee we shall suggest that the future of the island might lie not with the Federation but in placing it under an international organisation—for instance, the United Nations. For a hundred years, British sovereignty over Perim has resulted in access to the Red Sea being open to the entire international maritime community. Are the Government absolutely sure that, on our ceding sovereignty to the Federation, this access to the Red Sea will continue? Is it not at least possible that the tradition of access to the Red Sea might be interrupted?
There is a further reason which I must mention as to why it is possible and, indeed, desirable for Perim to have a different destiny from that of the Federation. On 3rd March this year, the Yemeni Republic Government, in a broadcast on San'a Radio, declared unilaterally that they were extending their territorial sovereignty from three miles to twelve. This alleged extension of

sovereignty—which, of course, we cannot accept—takes within the Yemeni sovereignty the Island of Kamaran and Perim itself. Were the island of Perim to have its ultimate destiny with the Federation, it would mean that, on the very day that the Federation received independence, it would find itself in a territorial dispute with the Yemen, and I think that we can all at least consider how serious could be the consequences of a territorial dispute between the Yemen and the independent Federation.
I have advanced arguments as to why it is desirable that the Government should at least seriously consider the desirability of introducing not just one Order in Council covering all three territories—all of which might take different courses in future—but to introduce the relinquishment of sovereignty by three separate Orders in Council. I hope that the Minister of State will be prepared to give serious consideration to the Amendments.

Mr. Francis Noel-Baker: In the debate 10 days ago, and on Second Reading, I explained my general attitude to the Bill. Indeed, a few minutes ago, at a private meeting, I repeated my explanation. I therefore do not propose now to go over the ground again. I have warned my right hon. Friend that unless he is able to make it clear that the Government are prepared to reconsider the change in policy announced by the Foreign Secretary 10 days ago, in the interests of using the United Nations to settle the future of this territory, I shall have to vote against the Government, whatever the consequences may be.
These Amendments deal with two points to which I want to refer—the security situation in the Colony and the defence arrangements which the Government have made. All of us must be aware that there is a very serious danger that the history of the end of the Mandate in Palestine will be repeated. The hon. Member for Hertford (Lord Balniel) referred to this, as he himself was present in Palestine at the time. British troops simply withdrew, leaving behind contending parties to fight it out, and this situation may well be repeated in Aden and in the South Arabian Federation.
My belief is that unless, even at this late hour, we are able to introduce the


United Nations not only to preside over a political settlement very different from the one foreshadowed in the Foreign Secretary's speech 10 days ago, but also to introduce a physical presence into the territory, it is very likely that we shall have a Palestine-type withdrawal, or, if one likes to describe it as such, a Congo-type situation in this territory.
We in this Committee must all be conscious of the abominable position in which the British troops have been placed, with the British Government, on the one hand, endeavouring to suppress what we describe officially as terrorism with an unreliable local Arab army and police force—their unreliability has been vividly illustrated in the last few days—mainly dependent on the use of British troops, and, on the other, trying to negotiate with the terrorists.
This has always been a terrible dilemma. It was so in Kenya and more so in Cyprus. In Cyprus, we were trying to fight what we called terrorism while trying to negotiate with the terrorists, although for part of the emergency we gave up the attempt to negotiate. In this present situation, as the Foreign Secretary has repeated, it is still our intention to try to talk to F.L.O.S.Y. and the N.L.F. while, at the same time, requiring our troops to maintain law and order. It is putting them in an impossible position.
The Minister of State would help the Committee if he told us something about the doctrine of the use of minimum force and the restrictions which have been placed on British troops, to which the hon. Member for Hertford referred. All of us must be very anxious about the rôle our troops can play, given the difficulties that have been imposed on them. My view is that, unless we can get a United Nations presence in this territory quickly, we are imposing a strain on the British soldiers and civilian population in Aden which they will be unable to bear.
Before I turn to the defence arrangements, I want to ask my right hon. Friend again whether he still maintains that the escalation in the internal security situation, reflected in the very grave events of the last 10 days—the fact that Crater is still held by those we describe as terrorists and that we have not yet decided

to go back and reimpose law and order—has no connection with the new policy announced 10 days ago. I find this very difficult to believe.
7.30 p.m.
The Committee will have noted with interest the way in which the noble Lord repeated that that policy had struck the Opposition as being a complete reversal of the policy of the previous two years. This is not only the impression of the Opposition and of the right hon. Gentleman the Member for Streatham (Mr. Sandys), the former Secretary of State for the Colonies, who said that he thought he heard himself speaking when listening to the Foreign Secretary, but it is my impression. I believe that the security situation will continue to get more and more difficult, and that more and more British and Arab lives will be lost unnecessarily, until the policy announced 10 days ago is reversed.
Turning to the defence arrangements, I am bound to say that I cannot understand them. The right hon. Gentleman announced that when we left the territory its integrity from external attack would be guaranteed by a carrier force, by a commando on that carrier force, and by a V-bomber force in the Persian Gulf. I cannot believe that the Government seriously thinks that President Nasser or other foreign forces wishing to cause a disturbance in Aden and South Arabia will solemnly parade their troops on the frontier of the territory and announce that they are about to commit a formal act of aggression in order to permit the aircraft from the carrier and the V-bombers from Masirah and the commando to move in.
Those hostile forces, based outside the territory, will surely continue to do precisely what they have been doing during the last few months, which is to use the technique of infiltration and subversion. I am using the terminology of the British occupying Power. Some people do not accept it and I am not sure that I do, but I am using it for convenience. It is quite obvious that these outside forces will continue to use the techniques of infiltration and subversion which they have been using in the last two years. How can one use a commando and aircraft carrier force and V-bombers based on the Persian Gulf to deal with that kind of situation?
If my right hon. Friend says that that is not the situation with which outside forces are designed to deal, what situation does he envisage? These arrangements may be a kind of bluff to placate the existing Federal Government, about which I shall have something to say later, but it is a bluff which is likely to be totally ineffective. Either the troops and the aircraft and the commando will be used in a manner totally inappropriate, or they will not be used.
I am very concerned about the subjects covered by this group of Amendments. I hope that my right hon. Friend will make a different kind of speech from that which he made on Second Reading. If he does not, I shall find myself in a very difficult position when the Clause is voted upon.

Mr. Dennis Walters: I agree with the hon. Member for Swindon (Mr. Francis Noel-Baker) that the Foreign Secretary's speech on 19th June was fairly broadly welcomed by the Opposition indicating, as it did, partial acceptance of some of the arguments which had repeatedly been put forward by the Opposition during the past year in various debates on the Middle East and Aden, namely, that the granting of independence to the South Arabian Federation in 1968, without this being accompanied by a realistic guarantee, was a dangerous and truncated programme.
It can, of course, still be asked whether the guarantee, as set out in the Foreign Secretary's speech, goes far enough to make it a realistic one. We argued consistently and repeatedly that the overthrow of the Federation by violence would provide a serious and damaging setback to the chances of preserving British interests in the area and in the Gulf and that a commitment to the Federation was a matter of good faith as well as good sense. I believe that this remains our position today.
The proposals outlined on 19th June by the Foreign Secretary go some way towards meeting the case which has been frequently argued by this side of the House. Whether they go far enough is debatable. Whether they meet the position of internal subversion is also debatable. These points have already been made in the course of the debate.
It has been said that the recent war between Israel and the Arab States has totally and permanently altered the position in the Middle East. I do not believe this to be true. I hope that it will be possible for Britain soon to re-establish friendly relations with the Arab world. In order to do so, we must make a positive effort to understand the present genuine feeling of shock and bitterness that prevails in Arab countries.
I also believe that in due course many problems which have been temporarily set aside will return to the fore and it will then be both necessary and right for Britain to continue to play a limited but nevertheless important and constructive rôle in the area. One of the most important aspects of this rôle is to help those countries which are friendly to us and which expect to receive some support from us—support which is to the mutual interest of our country and theirs.
Almost at the conclusion of the Foreign Secretary's speech on 19th June he made a very interesting remark. He said:
At the same time, we have decided greatly to increase the very considerable support which we have already promised to the South Arabian Government to enable them to defend their independence by additions to the strength of the South Arabian Armed Forces and by the provision of a powerful deterrent against external aggression for as long as we judge necessary for South Arabia to establish itself as a free and independent nation."—[OFFICIAL REPORT, 19th June, 1967; Vol. 748, c. 1144.]
I concur entirely with that remark by the Foreign Secretary. It is because of this that we feel there should be something in the Bill explicitly linking independence with a guarantee to the Federation protecting it against external attack and not allowing ourselves, as my noble Friend has pointed out very effectively, to be tied down to a specific date irrespective of any circumstance which might be prevailing at the time.

Mr. Eldon Griffiths (Bury St. Edmunds): I want to put some questions about public order in Aden when independence is achieved and I ask the Minister straight out whether the Government intend to stick to this date even if, as seems highly possible, there is no public order in Aden at the time. If, on 8th January, men and women are being killed and there is chaos in the area, are the Government still determined that our


troops should come out and that we should wash our hands of the slaughter and the bloodshed?
My second question arises from the Amendment on external security. With my hon. Friends, I was very glad to welcome the Foreign Secretary's statement. I do not wish to make any party capital out of it. I have some doubts whether the policy which the right hon. Gentleman put forward will, in fact, be effective, but my question is quite simple. If, on the date when independence is due, external security is not secured, and there is a threat either of overt aggression, or large-scale subversion, which is likely to bring down the new Government, are the Government still determined to wash their hands and to walk out and allow an independent nation, which we have largely brought into existence, to be snuffed out?
My third question concerns British troops. I have a constituency interest, because one of the battalions of the Anglian Brigade recently returned home from service in Aden. I am sure that the Committee will agree with me that our troops, the Anglians, the Northumberlands and other units, have handled themselves in Aden in the most trying circumstances in a fashion which compels admiration. Is it a fact, as reported, that there have been delays of up to three hours between the making of a request for permission to use large calibre weapons and that permission being given?
Secondly, is it a fact that on occasion our troops have found themselves unable to use armoured vehicles, thereby perhaps saving themselves, because the majority of tanks and armoured cars have already been sent home?
Thirdly, is it a fact that British troops have been ordered not to fire back, even though fired upon themselves?
Fourthly, is it a fact that the Government intend that British support for the new Federation after independence shall be confined entirely to air and sea action? Is it true as reported, that the Government intend that no British units or commandos shall go ashore if called?
Finally, it is at present envisaged that the Orders in Council will cover all territories. I have a special interest in Perim and I support the view that the House should be given an opportunity separately to consider its future.

7.45 p.m.

Mr. Robert Edwards: I had not intended to participate in the debate, although the subject interests me greatly, but a few words in support of the Government from these benches might be useful, as all the speeches so far have been hostile to the Government. The issue which we are discussing is whether we should leave Aden and the South Arabian Federation next January, or continue to maintain our position there for some years. I do not see how we can possibly justify extending our stay longer than January of next year in the light of the present situation.
The French were faced with precisely the same problem which we now face in Aden, South Arabia and the Arab world. The French decided to wind up the war in Algeria, which had cost them 40,000 French lives, to make their peace with the Arabs and to withdraw their massive bases in North Africa, which were much larger and which cost considerably more than our bases in the Persian Gulf.
The result has been that the French are now on friendly terms with the Arab world. They have signed 50–50 agreements with Algeria to exploit Algerian natural gas and oil. Although in the recent conflict between Israel and Egypt the French supplied the Mirage fighter bombers which did all the damage to the Egyptian Army and which went right under the Egyptian radar early warning system, although the Israeli's massive arms came from France, nevertheless it was Britain and America who were accused of supporting Israel, and that accusation was the basis of all propaganda from the defeated Arab countries.
There is a simple lesson to be learned: the French no longer have bases in the lands of the Arabs and we have. While we have bases and while we try to maintain ourselves as a colonial Power, we will have this resistance, this violence against our presence.
It has been my considered view for many years that we live in a world where peoples will not accept the presence of foreign armies any longer. While foreign armies are in their territories, they feel that they are denied the right to advance in their own way towards complete independence. The sooner we get out of Aden and South Arabia, the better. It is a dreadful death


trap for British soldiers. It is unfair to ask them to maintain this area.
I do not know why we should want to maintain it. The aircraft carrier, the Hunter planes and the V-bombers will be sent to South Arabian and Aden waters not to protect South Arabia or Aden, but just to maintain a considerable presence in the whole of the Persian Gulf. Basically, that is the Government's thinking. But we cannot stay in these Arab lands. To suggest that unless we stay there will be civil war and turmoil and murder is to put the situation the wrong way. The murder and the bomb throwing and the terror exist because we are there, because a foreign Power is in their land and there are no normal methods of development.
I have never accepted the view that the agreement which was signed by the right hon. Member for Streatham (Mr. Sandys) was legitimate. The only people who signed it with him were about four sheiks and sultans who had no visible means of support and who represented nobody. I remember that conference very well. Every elected representative at that conference walked out. The representatives of the People's Socialist Party walked out; the representatives of the Aden T.U.C. walked out; every member of the Legislative Council walked out and even the President, even the Sultan who was the Chairman of the Supreme Council of the South Arabian Federation, walked out and went into exile in Cairo. There was no backing for this agreement and to suggest that there was is a myth with no reality. The people who signed it represented only their own tribal vested interests.
I do not see why we should waste British lives maintaining a position in this area. I would not waste a single British life for all the sultans, rulers and sheiks of South Arabia. I know some of them, I have talked with them. They are some of the worst despots in the world. I do not know why we are worrying about them. I would withdraw, and let their own army deal with them, because they would not be there for five minutes. We talk about this marvellous South Arabian Federal Army which we armed and trained. It revolted against us, and the 22 British soldiers who were killed were shot by the Army of South Arabia. Do not forget that.
I do not know how one can expect to rebuild this Army and get some kind of stability in this country. These British soldiers were not killed by F.L.O.S.Y. or the Liberation Front, but by our alleged friends, people who were supposed to be capable of being relied upon to maintain some kind of stable economy.
The longer we stay the worse the situation will develop. Anyone who has been to Aden—and I have been there a few times—knows perfectly well that this is so. Here we have a British base, surrounded by 180,000 hostile Arabs. In the Crater area 100,000 Arabs live under appalling conditions, in the worst slums in the world, I should imagine. There are little, narrow roads with hovels in them. One cannot possibly maintain any kind of law and order there if the people are hostile. They are hostile to as, because we are living, for good or evil, in an era that is being swept by nationalism.
This is the outstanding revolution of our time, the nationalist revolution, the demand for independence. There is this great sweep of Arab nationalism that maintains Nasser in power, even in spite of these terrific military defeats. That is why I hope the House will not support any suggestion that we should stay in this area for any longer than is suggested in the Bill.

Mr. Douglas Dodds-Parker: The hon. Member for Bilston (Mr. Robert Edwards) will forgive me if I do not follow him during the few minutes that I intend to detain the House, because his argument had little to do with the two Amendments to which I have put my name, Amendments Nos. 4 and 5. Many of us, not only on this side of the Committee, believe that we must not cast South Arabia off without it having a chance of remaining both independent and free, as my hon. Friends have already pointed out in some detail.
The first point I want to stress relates to Amendment No. 4, where we talk about being
… secured against external attack.
Secondly, I want to refer to the point raised in Amendment No. 5, which refers to
…'but not before public order is secured'.
Somewhere in the Press during the last week or so I saw a reference to Tory


romantics. I do not know whether this is meant to refer to those of us who believe that by a little more patience and perseverance we can secure a reasonable future for South Arabia.
The point has already been made by my noble Friend the Member for Hertford (Lord Balniel), that we should have learned our lesson from Palestine and not once again transferred power under the conditions which have resulted from the Government's decision to transfer power without any sort of defence agreement.
It is a policy which the Government inverted 10 days ago and they are now in the chaos resulting from their two years of indecision. In those conditions of chaos we are trying to pull something together. The key question is that of internal security. We should strengthen our local forces. The reason for the latest difficulty, in the last ten days or so, was because the expansion of the local forces went too fast. Anyone who has had anything to do with recruiting and training of tribal forces knows that one cannot go beyond a certain speed without risking difficulties in getting various tribal groups out of balance.
It is that which went astray on this occasion and nothing as fundamental as the hon. Member for Bilston has tried to make out. We have to get the United Kingdom forces and administration out from responsibility as soon as reasonably possible and to do that, as we have constantly pressed from this side of the Committee, by transferring internal security at the earliest reasonable time to the federal authorities. I hope that when the Minister of State answers this part of the debate he will tell us when it is proposed internal security should be transferred to the federal authorities. That is the first and most important step to be taken.
One has to look at external aggression. The type of aggression such as we have seen in the Yemen during the last four years is what I have in mind. One of the difficulties that has arisen for the original Government of the Yemen, the Royalists, is that they have been cut off by sea from the outside world. It is there that, unlike some of my hon. Friends, I believe that the presence of a naval force and V-bombers on Masirah may be able to contribute to saving or protecting South

Arabia from the sort of seaborne and airborne attacks which have been made on the Yemen in the last four years.
If the sea routes between Al Hudaydah and Egypt had been cut, there would have been the greatest difficulty in supplying the war in the Yemen. That is where I believe the sort of forces which the Foreign Secretary talked about early last week will be effective in protecting the new Arabian Federation from outside attack. I believe that the sort of period that we ought to think about for protecting it after independence is about three years. Within that time, given support from outside, it could have built up its internal forces to maintain internal security and also have trained sufficient forces to defend itself, with our assistance in the form of equipment, against the type of attack made on the Yemen.
If the Minister of State could tell us what his thinking is on those lines, under Amendment No. 4, it would be of great assistance to the whole Committee.

Viscount Lambton: We all very much miss the Foreign Secretary today, because he adds very greatly to the gaiety of any occasion. It is a pity, considering the extraordinary changing of policy, that he is not present with us to discuss this matter. We understand that he is busy elsewhere.
It is impossible for any of us on this side of the Committee not to point out the extraordinary somersaults which there have been in the policy put forward from the Front Bench opposite. It is no exaggeration to say that had this policy been put forward a year ago, and had there been a definition of purpose by the British Government towards Aden, many of the casualties of the last few weeks would perhaps have been avoided. We have put the British Army in Aden, and especially the Royal Northumberland Fusiliers, some of whom are constituents of mine, in an almost intolerable position in the last few weeks. One cannot fight a war half-heartedly and one cannot keep order half-heartedly. One has either to keep it properly, or not do it at all. I do not think that it is satisfactory bottling in nearly 100,000 people in a very confined area. The bottling in of such a large population in very bad housing conditions can surely result only in further outbreaks of disorder and consequently perhaps further loss of life.
8.0 p.m.
Some of my hon. Friends have suggested that the internal security should be put in the hands of the Federal Goverr ment as soon as possible. I cannot help thinking that this is the only sensible course remaining open to us. If we are to put the government in the hands of the Federal authorities, we must trust them. It is a negation of any purpose which we have to say that we do not trust them enough to put internal security in their hands, but we trust them to govern the country in a comparatively short time. Therefore, the step of giving internal security to the Federal authorities should be taken as soon as possible.
The next point which I hope the Minister will deal with is dates. There is a most terrible fatality in giving dates. If one looks back to our history of the last 10 years, one sees that if ever we have given a date it becomes a sort of D-day for insurrection. In announcing any date we are merely causing almost inevitably outbreaks around and about it, and giving those who are stepping up the trouble in South Arabia a special time on which to concentrate.
We shall came later to the problem of Perim, so I will not go into that now. Nevertheless, we must stress the very great external pressures which will be against the Federation. My hon. Friend the Member for Hertford (Lord Balniel) made some very wise comments about the likelihood of the Egyptian-inspired terrorism being stepped up as a result of the Sinai war. Regrettably, that is only too probable. The probability is that Nasser has reduced his troops to about 23,000 in the Yemen. Therefore, the likelihood of external aggresison has perhaps been reduced. At the same time, the likelihood of further internal insurrection has been very greatly increased. This is another strong argument for putting the internal security in the hands of the Federation as soon as possible.
My last point which I hope the Minister will answer was raised by my noble Friend the Member for Hertford. There should be different Orders in Council for the three territories. I strongly support what my noble Friend said. As he pointed out, the fate of these three territories may be totally different. It may be possible very advantageously to turn the situation in Perim into an international outpost. That

is something which we shall discuss later. I hope that the Minister will say a word or two on this matter.

Sir Charles Mott-Radclyffe: The Minister of State will have realised by now that this debate is not being conducted in any partisan manner. Those of us who are worried about the independence date are worried for the simple and sincere reason that we know perfectly well that unless independence is accompanied by a capacity to preserve it and to maintain law and order, it will be completely and absolutely meaningless. Therefore, it is not the date which matters.
I do not think that there is any law of the Medes and the Persians or any magic about the date of 1st January. What matters is that independence should be given to the South Arabian Federation when circumstances make it possible for independence to be not meaningless, but meaningful and to create not greater dangers but greater security. We on this side, and I think that some hon. Members opposite, are moved by considerations as to what is best for the Federation in order to give it a reasonable chance to stand on its feet as well as what is best for British interests.
I agree with my hon. Friend the Member for Hertford (Lord Balniel) that the events of the last fortnight have not lessened substantially the threat to Aden from Nasser. They have probably increased the chances of subversion. It is against the possibility of a stepping up of terrorism and of an increase in the threats of covert aggression by Nasser that one has to consider what is the right date for independence. I am sure that unless we get on top of terrorism from the inside, and unless we can give effective security against aggression from outside, we shall lose the loyalty and respect of the Federal Ministers and the whole of the Federation will collapse.
Of the two threats, I am sure that it is the threat from inside, the subversion, which is the serious one. What worries is the serious danger of a coup, inspired by Nasser, by the terrorist movements with the usual weapons of bribery and assassination. One day we may wake up to find that there has been a coup, with the Federal Government arrested or the Government upside down.
I agree with my hon. Friend who said that airborne and seaborne forces are not the forces which can deal with such a threat. That was the point that the hon. Member for Swindon (Mr. Francis Noel-Baker) made. One cannot shoot up the city of Aden indiscriminately with aircraft flying from aircraft carriers in the hope of hitting a few of the terrorists who are about to get control. It is the internal security element which is vital, and it is that element which should govern the date of independence.
The revolt in the Federal Army was largely brought about by reason of the independence date of 1st January, minus, as it was originally, any effective guarantee of defence from the outside. We started going too quickly. This may well have been misunderstood, and very likely it sparked off the revolt.
I ask the Minister of State to deal with the points made from this side about the orders to British troops who are asked day in and day out, month in and month out to conduct the most difficult of all military operations—troops in aid of civil power. As long as we are in control in Aden—and until independence, whenever it may be, the Government are responsible for law and order there—it is absolutely wrong and quite irresponsible to ask British troops to maintain law and order and then so to circumscribe them with regulations about what kind of weapons they are supposed to use as to increase the liability to casualties, thereby causing unnecessary loss of life, and in the process delaying the effective reimposition of internal security and law and order. The Minister must take this matter very seriously, because it is worrying a lot of people.
I should like him to indulge in a little flight of fancy and imagine what independence day celebrations would be like if there was not proper internal security inside Aden on that date. We have already had an astonishing situation in Crater, where the mayor and other civic dignitaries appear to have been simply abducted. Does he look forward to the great day of independence, when Aden is handed over formally from British control to a self-governing status, unless there is complete security? Is he quite certain that it will not be an absolute farce?
Could he conceive of a situation where he represented the British Government on behalf of the Foreign Secretary, there in the garden of Government House, watching the Union Jack lowered for the last time and wearing a top hat and morning coat borrowed from the Foreign Secretary, with all the notables in Aden and the Federal Ministers, by then de jure whereas they are now de facto, and suddenly, within 48 hours, half of them are abducted? I hope that the right hon. Gentleman will not be among them. We would be upset to lose him.
Is he certain that simply giving the date of independence, completely oblivious to what the circumstances might be at that time and without any guarantee of internal security and effective law and order, is really in the best interests of those in Aden or in the best interests of stability in the Persian Gulf? Of course, it is not the date which matters. There is no magic about 9th January. There is not even any magic about 6th November. The date should be governed by circumstances in which the South Arabian Federation can stand on its own feet and look after its own internal security with a guarantee from outside which it has always asked for and which at long last Her Majesty's Government have given it.

The Minister of State for Foreign Affairs (Mr. George Thomson): The Committee has had a very wide-ranging debate on these groups of Amendments, and I shall do my best to answer as many as possible of the points which have been raised.
A number of Amendments are being taken at once and, with one exception, what they all have in common is that they seek to delay the date of independence which we have stated to be the intention of Her Majesty's Government. The Amendment in the name of the hon. Member for Beckenham (Mr. Goodhart) states a specific calendar delay. If it is any satisfaction to him, there were considerable researches in the Foreign Office as to the magic meaning attached to 3rd November. Perhaps I might tell him afterwards some of the theories which were adduced to account for this date. Now that he has so disarmingly given the Committee the reason for choosing it, I regret that, in due course, I shall have to spoil his birthday in 1968


by saying that it is not an acceptable Amendment.
In ranging over the various Amendments, some seeking a calendar delay, some seeking to link independence with freedom from external attack, one seeking to link it with full internal security and another seeking to have different appointed days for the different Colonial Territories, the general ground which has been deployed for arguing in favour of delay is the disturbing events of the last few days or, rather, they have been taken as a particularly disturbing example of the kind of background to South Arabia, making the hon. Gentlemen who have tabled the Amendment feel that our intended date for independence is likely to be too soon.
8.15 p.m.
In answer to their questions, I want to give the Committee what information I can about the present situation in Aden, and perhaps I might begin by appealing to hon. Gentlemen not to jump to too hasty generalisations and conclusions from the events of the past few days until we have had a chance to see them in rather longer-term perspective. I would remind hon. Gentleman that we are still in the middle of these events and the risks which go with them, and I am sure that we would not wish to say anything which made it more difficult for those who have the very hard task of looking after our affairs and carrying out our responsibilities for law and order in Aden and in South Arabia.
When I made my statement to the House on 21st June, I used words which I should like to repeat now, since they offer a general reassurance about Her Majesty's Government's attitude to the events now taking place. I assured the House then that we are determined to maintain law and order in Aden, we are determined to ensure the safe withdrawal of our troops, and the Government will not hesitate to take any necessary action to secure this basic aim. That is the background to the announcement which was made today about troops being sent out to Aden as reinforcements, and that is presently taking place.
I want now to give the Committee information about the background to the disturbances themselves. I say as plainly as I can to the hon. Member for Windsor

(Sir C. Mott-Radclyffe) that there is no evidence at all that it was the announcement of January as the intended date for independence which sparked off the mutinies in the South Arabian Forces.
Here I address myself to my hon. Friend the Member for Swindon. The background to these disturbances is not related to the date which we have proposed for independence, nor is it related to the general package proposals which my right hon. Friend put before the House last Monday. The origins of the disturbances are quite different. First of all, there is a general background. There is the fact that the repercussions of the Arab-Israel conflict at the northern end of the Red Sea have begun to make themselves felt acutely in South Africa and in Aden and have led to a very sensitive situation between British forces and the Federal forces.
Against that over-shadowing general background there was the problem which I described to the House last week of the quick expansion and reorganisation of the Federal forces. having produced certain tribal and personal jealousies and conflicts of interests which were the origin of the troubles.

Sir C. Mott-Radclyffe: I am afraid that the right hon. Gentleman has missed my point, which was that, in my view, the expansion had to happen too quickly.

Mr. Thomson: We are attacked in the House for doing things too quickly. At other times, we are attacked for not doing things nearly quickly enough. In the Second Reading debate, I was attacked from the Opposition Front Bench for being too dilatory about doing these things.
This was one of the accidents which happen in the building up of new forces in a developing country. It is not the only country in which it has happened, as the right hon. Member for Streatham (Mr. Sandys) pointed out on another occasion.
However, that is the background. That is not to say—and here I meet the point made by my hon. Friend the Member for Swindon—that, when there was a chain reaction following the disturbances, and when that chain reaction reached Crater, with its ferment of nationalistic groups, the normal conditions of conflict between


the N.L.F. and F.L.O.S.Y. of internecine dispute between them did not become involved. I cannot state too plainly that the origins of the disturbances lay in other events than the policy statement by Her Majesty's Government last Monday.

Mr. Sandys: The right hon. Gentleman has referred to the N.L.F. and F.L.O.S.Y. In view of what has happened during the last week, is it still the Government's intention to lift the ban on the N.L.F.?

Mr. Thomson: I shall come to that in a moment if I may in connection with some other comments which were made about our policies. Perhaps I could complete my report to the House on the situation inside Aden itself.
There were no clashes between British troops and the South Arabian Army as such. British troops became involved with the newly-formed South Arabian Police, and I am glad to be able to tell the Committee that the armed police who became involved in these disturbances in the Crater district have handed in their arms. I think that all the arms except one rifle have been handed in and recovered, and there is no question of their having been taken for other purposes.
The Crater area is now virtually sealed off. Neither the High Commissioner nor the Commander-in-Chief wish to provoke further bloodshed by putting British troops in immediately. They are trying to ensure the restoration of normal conditions progressively in other ways. As I have said, the situation has been made more difficult by the blow-back from the Arab-Israeli conflict. South Arabian soldiers and civilians have been affected by the lies put out by Cairo Radio about British military involvement on the side of the Israelis in the conflict, and this is a very serious additional complication which our authorities in Aden have to handle at the moment.
The hon. Member for Hertford (Lord Balniel) asked about the kind of conditions in which our forces were having to operate in the present situation. He referred to a report in The Times of today in which the correspondent, reporting the action by Mr. Owen of the British High Commission and representatives of the Federal Ministry of Defence in going

in to recover money from the Crater district, said:
Argyll and Sutherland Highlanders guarding Marine Drive … had orders not to shoot even if fired upon.
I would like to tell the hon. Gentleman and the Committee that the report is not accurate. The orders given to the troops were that they were to fire only to protect themselves if they were under attack. I hope that this helps to clear up that point.
Many questions have been asked by hon. Members who are anxious about the difficulties which our troops are facing with such courage and restraint in this difficult situation. Detailed questions ought to be referred to my right hon. Friend the Secretary of State for Defence. I do not have either the authority or the knowledge to answer them, but I would like to tell the Committee that there is no ban on the use of particular weapons. The test is what kind of operation should be conducted, and what weapons are appropriate to it.
I think that the hon. Member for Hertford raised the question of the kind of rifles being used. All soldiers have the self-loading rifle, and patrols have automatic weapons as well, and on this difficult question I commend to the Committee an editorial in the Daily Telegraph at the beginning of this week, which pointed out that, in the event, the decision on what are the appropriate weapons to use in a situation like this has to be taken by the civil power carrying out these very heavy responsibilities in Aden. Therefore, anxious though I am to help the Committee as much as I can, I think I am entitled at this stage, when we are in the middle of dealing with the aftermath of a mutiny, to ask the Committee to trust the men on the spot with this difficult decision.
Yesterday I saw the Commander-in-Chief in London. The High Commissioner, Sir Humphrey Trevelyan, and the Commander-in-Chief are wholly agreed on the recommendations which have been made to deal with this difficult situation. Their one concern remains to fulfil the twin aims of the Government's policy, that is to bring about a safe withdrawal of our Forces from South Arabia, and to leave behind a decent independence, but the immediate problem, which I know the Committee will appreciate, is to balance


the need to minimise bloodshed against the need to restore normal life inside Aden, and I repeat that the High Commissioner and the Commander-in-Chief are at one on what is the wisest course to pursue in these very difficult circumstances.
The hon. Member for Hertford, dealing with the wider issues behind these Amendments, repeated what was said in the debate last week and gave us the Conservatives' view of the package unveiled to the House by my right hon. Friend. He said that this constituted a dramatic reversal of Government policy, and that we had accepted in practice the defence agreement advocated, and indeed negotiated, by the right hon. Member for Streatham (Mr. Sandys) while he was Commonwealth Secretary. This proposition was rather vigorously echoed by my hon. Friend the Member for Swindon, who took the right hon. Member for Streatham at his word in last week's debate and believed him when he said that he could have made my right hon. Friend's speech.
I think it is time the facts of the matter were put quite plainly, and in proper perspective. The right hon. Member for Streatham knows that in the light of all that he has said he could not have made my right hon. Friend's speech last Monday. That package put forward by my right hon. Friend was basically at odds, not merely on one idea, but on a number, with what the right hon. Gentleman has urged on the Government for a long time.

Mr. Sandys: I did not say that. I said that once or twice I thought I was listening to myself, but in the course of my speech I made a number of reservations about the right hon. Gentleman's speech.

Mr. Thomson: The right hon. Gentleman had an unusually persuasive effect on my hon. Friend the Member for Swindon, and I wanted to put the record right. It is not true to say that we are carrying out the kind of defence agreement, under another sort of title, which the right hon. Gentleman put forward when he was proposing a defence treaty between an independent Government and ourselves, and a defence treaty which, as we understand it, was an open-ended commitment. We have never had any indication that it was limited in time,

and certainly any time limit was to be extensive.

Mr. Sandys: This point has been repeated so often, that we were envisaging what is called an open-ended commitment. I do not quite know what this means. If it means a treaty for an indefinite period of time, this was not so. The right hon. Gentleman said that we had negotiated a defence agreement. We never did. All we did was to commit ourselves in principle. It was a firm commitment in principle to negotiate a defence agreement. The period and terms of the agreement would have been matters for negotiation.

8.30 p.m.

Mr. Thomson: This is certainly not the impression which was created, and which the right hon. Gentleman's powerful interventions in many of our debates over many months have created in the House. There is a very considerable difference of principle between the kind of defence agreement which the right hon. Gentleman was proposing and the kind of offer of protection against external aggression which we have put forward in our package, in which the use of the V-bomber force is to be for as long as Her Majesty's Government consider necessary. This is not an open-ended commitment. It is a limited commitment. It is very different from the kind of thing which has been advocated from the benches opposite. Whether we are right or whether the right hon. Gentleman opposite is right, it is different, and it is quite wrong to pretend that they are the same thing.
Secondly, the right hon. Gentleman himself, I think, asked me a few moments ago questions on internal security inside the independent South Arabia when it becomes independent. I was also asked about this by the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths). Here, again, is a second example where our proposals are basically different from those put forward from the benches opposite. I want to make it quite clear that our offer is an offer of protection against external aggression, and we have made it very clear—I did myself in my winding up speech—that we regard it as a distinctive hallmark of independence that a country has its own ability to control its own internal security, and we are not


committing British forces to internal security operations. Again, we are not committing British troops to a combat rôle on the ground in South Arabia which I understand was strongly advocated from the benches opposite.
Finally, on the question raised about the N.L.F. and F.L.O.S.Y., there is nothing so far in the recent events which has made the High Commissioner change his original recommendation to us that as long as there is determination to ensure law and order, there should be no political objection to lifting the ban on N.L.F. It would be very wrong of us that we should put F.L.O.S.Y. in the same position as N.L.F. by putting a ban on F.L.O.S.Y.
I have spelt this out at some length in order to convince my hon. Friend the Member for Swindon that he is quite wrong in believing that we have had a dramatic conversion to Conservative policy in the package put forward.

Viscount Lambton: Before the right hon. Gentleman sits down, would he just say a word or two about giving internal security into the hands of the Federal Government? His last words seemed to be suggesting that when independence is granted all internal security must depend upon the strength of the Federal Government. Is that not an argument for now putting internal security in the hands of the Federal Government?

Mr. Thomson: I must tell the noble Lord that I was not sitting down, but out of courtesy giving way to my hon. Friend the Member for Swindon, and I was about to come on to this point.

Mr. Francis Noel-Baker: I am obliged to my right hon. Friend. He has referred to me. Of course, I listen with respect but usually with disagreement to the right hon. Member the Member for Streatham (Mr. Sandys), the former Colonial Secretary, but on this occasion I was quite capable of making my own assessment of my right hon. Friend's speech. It was the general impression on those benches, and on these benches, as evidenced by the fact that every one of the back bench speakers speaking from this side took the same view as I did, that my right hon. Friend's speech represented a dramatic change of British Government

policy in South Arabia. I can only add to that that this was the impression at the United Nations. If my right hon. Friend says that he has been there since, let me tell him that since he has been there I have spoken to the head of the United Nations Mission to Aden. I say again that the impression at the United Nations, as in the House of Commons and as throughout the world, is that there was a dramatic reversal of policy. I am against it.

Mr. Thomson: It is a sad experience in the House and in this Committee that people can have entirely opposite impressions of exactly the same set of events, and I can only tell my hon. Friend that whereas he, I understand, paid a necessarily rather fleeting visit to the United Nations before my right hon. Friend had declared his policy in the House, my right hon. Friend had the advantage of spending a week at the United Nations immediately after announcing his policy and of speaking with Mr. Perez Guerrero, the Chairman of the United Nations Mission. I can tell the Committee and my hon. Friend that my right hon. Friend's impression of the reaction at the United Nations is utterly different from that of my hon. Friend and there is no suggestion that the Chairman of the United Nations Mission, Ambassador Perez Guerrero, has described my right hon. Friend's policy statement as a dramatic reversal.
But I wish to pass from that to the point raised by the noble Lord and a number of other hon. Members, and that is about the degree to which and the speed with which the Federal forces can be brought into internal security operations inside Aden. First, we must recognise, as the hon. Member for Windsor said, that the final responsibility for law and order in Aden remains that of Her Majesty's Government so long as there is not independence there. This responsibility cannot be devolved on anyone else. It had been our desire to phase the Federal forces into the work of internal security in Aden as quickly as their experience and training equipped them, and this remains our policy, but we must face the fact that, in the immediate aftermath of last week's events, it may take a little longer than originally hoped.
I now come to the Amendments—

Mr. Walters: Would the right hon. Gentleman answer my point about what the Foreign Secretary actually meant by his almost concluding phrase:
… the provision of a powerful deterrent … for as long as we judge necessary for South Arabia to establish itself as a free and independent nation."?—[OFFICIAL REPORT, 19th June, 1967; Vol. 748, c. 1144.]

Mr. Thomson: My right hon. Friend meant exactly what he said and what those words mean. I do not understand the hon. Member's question—

Mr. Walters: With no time limit?

Mr. Thomson: Yes, as long as is necessary—[HON. MEMBERS: "No limit?"]not at all, because "as long as is necessary" means that it is entirely in the Government's control. This is exactly the reverse of the kind of open-ended defence agreement with which we were so familiar from the right hon. Member for Streatham—

Sir C. Mott-Radclyffe: Surely it is not entirely within the control of Her Majesty's Government, because the Government do not control the degree of threats from different quarters at any given moment.

Mr. Thomson: I would never claim that the Government controlled the international situation, but they do control the commitment of Government Forces, which is very different from the kind of commitment involved in a defence agreement between two sovereign states.
I now come to the Amendments and am grateful for the Committee's patience. First of all, that of the hon. Member for Beckenham proposes that we should insert in the Bill a specific date for independence, 3rd November, 1968. We have announced our intention on the timetable for independence after very lengthy consideration of all the factors involved, and the Government are certainly convinced that nothing is to be gained, either by us or by the South Arabian Government, from postponing the date in the way he suggests.
We are, of course, aware of the threats which affect South Arabia both from inside and from outside, but it is our considered view that the continued presence of British forces tends to make the internal security situation sometimes

more difficult rather than easier, as we have had ample reason, I am afraid, to find out during the last few days. For these reasons, therefore, I must recommend the Committee to resist that Amendment.
The hon. Member for Cheltenham (Mr. Dodds-Parker) and the hon. Member for Westbury (Mr. Dennis Walters) both supported the Amendment, saying that the date of independence should be postponed until we had guaranteed freedom from threat of external attack for South Arabia. I can only say that that seems to be singularly unrealistic. I do not think that there is a nation on our troubled earth which could say, at any given moment, that it was entirely secure against external attack. Therefore, if we were to accept the Amendment, it would mean staying indefinitely in South Arabia and a complete reversal of our policy.
The other Amendment relates to the state of internal order in South Arabia, and here again I must recommend the Committee to reject it. It is very much in the interests of South Arabia, as well as in the interests of Britain, that there should be a firm date for independence towards which people can start working now. There is nothing that more concentrates the energies and ideas of people facing these very difficult problems than to know that they have a very firm target date to aim at. It would solve nothing to postpone the date of independence in the way mentioned by the hon. Member for Bury St. Edmunds and other hon. Members.
As I have said, the South Arabians must deal with their own internal security problems. We will give them, and are giving them, every help we can to enable them to do this for themselves, but in the end, perhaps especially in the Middle East with its present conflicting trends of Arab nationalism, it is a vital essential of sovereignty that the independent South Arabian Government should be able to look after their own internal security for themselves without outside help; and the best way to bring that about is to set a firm date for independence and to work towards it.
The noble Lord the Member for Hertford suggested that we ought to have separate appointed days attached to the


different islands. I believe that on another group of Amendments we shall discuss the reasoning that lies behind the noble Lord's proposal, which is that there ought to be a special approach to particular islands. I would merely say now that it does not seem to us at this point that it is at all practicable for Her Majesty's Government to retain responsibility for Perim or the Kuria Muria Islands after we have relinquished sovereignty over Aden and withdrawn our forces from South Arabia, and it is very difficult, I must confess, to see any advantage in being able to relinquish sovereignty over Perim and the Kuria Muria Islands before we relinquish sovereignty over Aden.
Here, again, there is a great advantage in having a single date to work for: it is tidier, and it helps to concentrate the ideas of the Government in the same way as I have been arguing in regard to the South Arabian Government over the date for independence. For these reasons we must also resist the suggestion that there should be provision for different appointed days for different territories.

Lord Balniel: The purpose of the Amendment I moved, and of the Amendments that were taken with it, is not so much to achieve separate appointed days as to have separate Orders in Council for each of the territories. I believe that the three Amendments to which I spoke achieve this purpose. The reason is the possibility that these three separate territories will not have the same ultimate destiny, and it seemed to us desirable that there should be three separate Orders in Council. Would the right hon. Gentleman be so kind as to address himself to that argument?

Mr. Thomson: I am grateful to the noble Lord for that clarification. If that is his motive in putting forward the Amendments, I must say that the Amendments are unnecessary. The point is whether there should be different appointed days for relinquishment. If it is merely a question of different destinations for these territories—different decisions as to where sovereignty should be transferred—that can all be done on the same appointed day in a single Order in Council. I am ready to study more closely what the noble Lord has said, in case there is

need to reconsider the point in another place, but I am advised that it is not necessary to accept these Amendments to meet his point.

Mr. Sandys: Before the right hon. Gentleman concludes, it seems to me that this is a point on which the Government might be helpful to the House. We are not asking for a change of policy, but we understand that the Government have not themselves yet decided what is to be the future of Perim and the Kuria Muria Islands. It seems to me conceivable that in the process of deciding what should be their future, the Government may find that it is not convenient or appropriate to relinquish sovereignty on the same date. I can see no possible difficulty in safeguarding the Kuria Muria Islands after relinquishing Aden, but in view of the situation would it not be a wise precaution for the Government to have that amount of flexibility in their Bill?

8.45 p.m.

Mr. Thomson: I am prepared to study that a little further in view of what has been said. We are prudently bringing this legislation forward six months ahead of the date we are putting forward as the date for independence. This gives a good deal of time for coming to a conclusion on these matters. For the practical reasons I have given the House it is difficult to see how we could retain responsibility for these islands after we have left South Arabia, but I am prepared to look at that again.

Lord Balniel: My hon. Friends and I have been rather disappointed that the Government have not found it possible to accept any of the Amendments we have put forward, but, in view of the undertaking by the Minister of State that he will specifically study most closely our request for separate Orders in Council for these separate territories, I advise my hon. Friends, if they feel so inclined, to withdraw their Amendments.

Mr. Goodhart: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman: The next Amendment is No. 7, in page 1, line 12, leave out 'Perim' with which we can discuss Amendment No. 9, in Clause 9, page 5, line 10, leave out 'Perim', new


Clause No. 1—Lease of Perim to United Nations—and Amendment No. 10, in the Title, line 3, leave out 'Perim'.

Mr. Francis Noel-Baker: On a point of order. May I seek your guidance, Mr. Irving? I understand that you are proposing to call a group of Amendments one of which relates to Clause 1 and the others to other Clauses. I think that it was the understanding that certain points would be covered in discussion of the group of Amendments we have discussed, particularly security and defence arrangements, but there are specified points I wish to raise on the Question, "That the Clause stand part of the Bill". When will it be possible to do that?

The Deputy Chairman: The Question, "That the Clause stand part of the Bill" will be put after Amendment No. 7 and the associated Amendments have been discussed.

Lord Balniel: On a point of order. May I seek your guidance, Mr. Irving? Would it be in order if we wished to divide the Committee, not on the Amendment about to be moved, but on subsequent Amendments which are to be discussed at the same time? Would it he possible to have a Division on any of those should we so desire?

The Deputy Chairman: It would he possible. I could not give a blanket assurance about all the Amendments, but it would be possible on new Clause No. 1.

Lord Balniel: Our greatest interest lies in new Clause No. 1. If we asked for the right to have a Division on that, would you grant it?

The Deputy Chairman: That would be in order.

Mr. Eldon Griffiths: I am a little confused about which Amendment I am now supposed to move.

The Deputy Chairman: The Amendment we are discussing is Amendment No. 7 and with it we are discussing Amendment No. 9 and new Clause No. l and Amendment No. 10, but the hon. Member will be proposing Amendment No. 7.

Mr. Eldon Griffiths: I beg to move Amendment No. 7, in page 1, line 12, to leave out 'Perim'.
The purpose of these Amendments and the new Clause linked with them is stated quite clearly in the language of new Clause No. 1. It can be summarised under three short headings. First, by excluding Perim from the Bill, we seek to prevent this strategic island from falling into hostile or unstable hands which might at some point use Perim to restrict or threaten freedom of navigation through the Straits of Bab el Mandeb. This might be described as the strategic denial ground of this new Clause. We are seeking to deny Perim to those who would misuse it against an international community.
Secondly, by empowering the Secretary of State, to offer Perim to the United Nations, we seek to ensure positively rather than negatively that free passage through the straits is guaranteed not merely by international law and practice but by the physical presence in the straits of a body representing not one nation but all nations and not one continent but all the continents. That is the positive ground, for Perim could well become a potential dagger pointing at the throat of the Red Sea. We prefer to see it as an international guard post assuring to the world's ships, and perhaps to its aircraft at some stage in the future, uninhibited and lawful passage through this vital waterway.
Our third purpose is that the Amendment could pave the way towards a new beginning for the United Nations in the Middle East. Sooner or later if there is to be peace in this area an international presence will have to be re-established in it. It may be that Sinai or Jerusalem would be the best places to make a start, but from Parliament's point of view both of them suffer from one irredeemable disadvantage: neither is under Britain's control.
But Perim is under British control. It lies at the strategic junction, not only of the Red Sea and of the Indian Ocean, but at a point where South Arabia and the Horn of Africa come most closely together. I predict that this area could become one of the world's future trouble spots. Our own difficulties in Aden are one clear sign of this. Another sign is the presence in Yemen of many thousands of Egyptian troops. Not far away from Perim is the Red Sea port of Hodeida where Soviet submarines are reported


regularly to refuel and in whose construction I understand that Chinese engineers at one time at least lent a hand. The Soviets at least have no doubts at all about this area's strategic significance.
Then there are the troubles on the other side of the Red Sea in Somalia, Ethiopia and Kenya. There is the prospect that a French withdrawal from Djibouti, which cannot be delayed much longer, could leave another very delicate and difficult situation on the western shores of the Red Sea, just as our withdrawal from Aden may leave something of a vacuum in South Arabia.
The third ground on which we put forward the Amendments is to head off, if it is possible to head off, at least some of the frictions and antagonisms which may, and which I believe will, be generated by these expected changes. If, as I believe possible, Perim were to be internationalised, the world community would be injecting a restraining influence, perhaps even a growth point of peace, into an area which otherwise could well become a new cockpit of war.
I summarise our reasons for putting forward these Amendments in this way: first, denial to potential enemies; secondly, protection of a vital international waterway; and, thirdly, tangible British support for the United Nations.
I want to say a few words about Perim itself. I have not visited the island, though I have seen it from afar. From all I can learn about it, it is small, flat, poor, and extremely dry. It is not much bigger than Gibraltar; but where Gibraltar is a towering block, easily defensible, Perim's highest point is very little taller than Big Ben.
On the Arabian side of the Island the straits of Bab el Mandeb are barely two miles wide and not very big. Very few ships pass this side. The western or African channel is one of the world's great shipping lanes. Except when Suez is closed, as regrettably it now is closed, this channel is used by a teeming procession of oil tankers, cargo vessels and great liners, carrying most of the wheat that goes to India, almost all the people who travel from Britain to Australia, and the bulk of the Middle East oil that is shipped to Western Europe.
There is one conspicuous feature of this traffic. So far, thanks to Britain's

command of Perim, there has been no attempt to stop it. Suez has been blocked. The Dardenelles have been blocked. The Copenhagen Sound, the Tushima Straits, the Sunda Channel—all these strategic waterways at one time or another have been blocked or threatened to be blocked. But the Straits of Bab el Mandeb have never once been blocked. That is precisely the motive which led our ancestors, perhaps more far-sighted than we are, originally to take hold of Perim. They did so precisely because they wanted to prevent any attempt to stop traffic going through the Straits.
First on the scene was the Honourable East India Company, which landed a British contingent there because it feared that Napoleon might strike down the Red Sea towards India. Then, in the 1850s, the Royal Navy took over because, in the minds of British Ministers then—it is all in the historical record—there was no doubt that Perim in unfriendly hands could be the stopper in the Red Sea bottle. Neither can it be gainsaid that, by itself occupying Perim, Britain has ensured, just as surely as we did when we controlled the Suez Canal, that there should be no interference with the free passage of the ships of all nations.
Notice what happens when Britain loses control of these strategic locations. As soon as we lost command of Suez, the canal became an instrument of Egyptian national policy. For years, it has been closed against Israel, and today its closure, for the second time, is costing the world in general and Britain in particular millions of pounds a week. So far, this has not happened in the case of Perim, but who dare say that it will not?
Which right hon. Gentleman would be so bold as to say, against the background of the recent war, that the Straits of Bab el Mandeb will not be used, as Aqaba and Suez have been used, to further the national interests of those who may one day control it? Which Minister will tell the international shipping lines, at a time when the Suez Canal is closed, that they need have no anxiety about the Straits of Bab el Mandeb, that they will never be the object of some arbitrary, if yet unforeseeable, action by one or other of the riparian Powers?
At present, the South Arabian Federation, the only logical territory to which


Perim might be handed if the Bill goes through, is heavily dependent on Britain. Its present rulers are as unlikely as they are at the moment unable to turn Perim into a gun emplacement. But, once Britain finally withdraws from its commitments to Aden, it will be open to question whether a future Government of the Federation, dependent on Egypt, perhaps, influenced by the Soviet Union, perhaps, will not seek to use Perim to stop Israeli if not other ships from using the southern Red Sea.
In the face of such a danger, some hon. Members may propose that Britain should hold on to Perim, perhaps, as a base. This is not our proposal. We are emphatically not proposing a new British base. In my view, bases are on the way out. What we propose is that the Government should make an approach to the United Nations to see whether it would be prepared to accept Perim's becoming something entirely new, the first United Nations strategic trusteeship territory.
I have said that this is something new, but I hope that the right hon. Gentleman will not think that that in itself is a reason for opposing it. Perim has advantages for a United Nations presence. It has a small but excellent harbour which is capable of receiving sizeable ships, ships which, incidentally, could carry short or medium-range missiles capable of controlling the Straits. Secondly, it has a small airstrip. Although I do not know if the airstrip is used today, I am advised that the island could accommodate without too much difficulty a fairly large-scale runway, able to handle many types of modern aircraft, including military aircraft.
9.0 p.m.
It is true, as the right hon. Gentleman said the other night, that the cliffs on the Yemeni or South Arabian shore are high enough to enable guns placed on top of them to sweep over Perim. But far from militating against the suggestion of an international presence, the fact that cannon have already been placed on the heights is yet another piece of tangible evidence that the dangers of the straits being blockaded are very real for if those guns have been placed on the Yemeni cliffs, as the Minister told us, no one can imagine that they were put there to bombard Perim. There is very little in Perim that is intrinsically worth bombard-

ing. The sole object of artillery placed on those cliffs is to command the straits and the international waterway through them.
The best way to neutralise that threat is to establish on Perim an international presence standing physically between any would-be attacker and the ships that pass in the channel. It will be argued that the United Nations might not agree to take over Perim. I do not know, and the right hon. Gentleman does not know, whether the United Nations would accept such an offer. Some of its members may not want it; others may be indifferent. Perhaps, on the basis of recent experience, the likeliest event is that the United Nations would not be able to agree whether to accept it or not, and in those circumstances it might defer a decision until another day.
Yet there can be no doubt that the United Nations is entitled under its Charter to accept Perim as a U.N. trust territory. The Charter not only permits but actually invites those nations which administer strategic territories to hand them over to the U.N. I shall not weary the House by dealing with all the Articles in the Charter that refer to this possibility. Article 77 states specifically that
The trusteeship system shall apply to … territories voluntarily placed under the system by States responsible for their administration.
Article 81 says:
The trusteeship agreement shall in each case include the terms under which the trust territory wil he administered and designate the authority which will exercise the administraton … such authority … may be one or more States or the Organisation"—
that is, the United Nations itself.
There are more Articles that deal with trusteeship. It is underlined again and again that strategic territories may be placed under the trusteeship system and administered either by the U.N. directly or by a consortium of the Powers under the authority of the Security Council. These Articles are tailor-made for Perim. They allow us—indeed, they invite us—to transform the island into an international trust territory administered under the authority of the Security Council by a number of nations, which should include one or more representatives of the Arab nations, one or more of the great shipping nations and, perhaps, if it seemed appropriate, a representative of the Secretary-General.
The first responsibility of such a trusteeship over this strategic island would, of course, be to the people of Perim. To give just one example: there is no reason why, under trusteeship, the people of Perim should not be freed from the scourge of drought that has plagued them for many centuries. But the main purpose would be to save Perim from becoming, as one day it may well become, a block to free navigation through the waterway.
I therefore conclude as I began. What we on this side ask in the new clause is not delay in the independence of Aden or Perim. Those matters have been dealt with in previous Amendments. We welcome the independence that the Bill will give to these territories, although we may differ from the Government over the timing and manner in which it is achieved. Nor are we seeking the creation of any new British base or, for that matter, the retention of an existing base. What we are asking is simply that, at a moment of particular difficulty in the Middle East, when more than anything else an element of international stability needs to be injected into the area, the Government should at the least keep open the option of an international presence being established in this strategic spot.
At the very least, we ask the Government, at a time when Suez is closed, to avoid giving Perim as yet another hostage to fortune and to ensure that the Red Sea shall not be bottled up at this southern end against the interests not only of Britain, but of the whole international maritime community.
Finally, we are asking that the Government, who have rightly placed so much emphasis on their commitment to the United Nations, should seize this opportunity, which may never recur, to establish a positive and physical United Nations presence in the world's first United Nations trust territory.
This is an action that lies uniquely within the power of Britain. We may not any longer be prime movers in large parts of the world. Here is one place where we could and should take the lead. We can do it for the good of Britain, for the good of both the Arabs and the Israelis, for the good of the maritime

community and, in my submission, for the peace of the world.

Mr. Robert Edwards: I listened with very great pleasure to the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) and it seems to me that we can very well have an interesting discussion on the issues he raised. The principles he enunciated are of very vital importance, not just for the Persian Gulf, the Red Sea and the Middle East but for other strategic waterways all over the world. There is an urgent need for international control of many strategic waterways under the United Nations.
I am also convinced, as I am sure we all are, that, by some means or other, we have to get a United Nations presence in the Middle Eastern lands. The last two Governments we have had had glorious opportunities of doing this but completely failed. The Conservatives refused to allow a United Nations mission to visit Aden and South Arabia and the present Government were rather reluctant to allow the U.N. to interfere in any of our Colonies and the decision to let it come in only came later.
I hope that this Amendment means what it says and that, as advocated, it represents the beginning of a new attitude by the Opposition towards the United Nations. They have not been so forthcoming in the past. But this small island of Perim is not viable and would have to be sustained by considerable financial support from the great Powers. It has no kind of economy. It is only a base. It has no agriculture or water. It is sustained by us as a base. One could not expect the United Nations to sustain this island as a base on behalf of the United Nations. One could only invite the United Nations to sustain and maintain the small population of this island, as we have done, as a kind of control over a strategic waterway.

Mr. Eldon Griffiths: The hon. Member will be aware that there are no British installations on Perim. None of the fishermen there works for the British. The economy is not dependent on us. It is a fairly desert island with some 300 people.

Mr. Edwards: The whole of the harbour installations were built by us. It has a great harbour which has been


sustained by us. It is there for our purposes in crisis, as my hon. Friend knows very well.
We are discussing the very noble principle that in certain parts of the world there are strategic waterways which should come under international control so that they may remain free for world shipping. If acceptance of this Amendment carries this great principle one hesitant step forward then I think there can be no reply to the points made.
I am certain that the great strategic waterways of the Suez Canal, the Dardanelles and the Panama Canal, which are constantly a source of tension, would best be controlled by the United Nations, and I believe that the United Nations should have the revenue that goes with the control of these waterways. This would give the United Nations, for the first time, a base from which they could develop an international police force with the revenue to sustain and maintain it to keep the peace of the world.
We have to make a start in this direction. If this modest Amendment leads towards this then it is worthy of thought and serious discussion. I hope that my right hon. Friend the Minister of State for Foreign Affairs will treat this Amendment as raising a serious issue which both sides of the Committee would like to see debated, as it has been by the hon. Member for Bury St. Edmunds.

Mr. Sandys: I intervene very briefly to support the proposal contained in the new Clause. I am glad that the hon. Gentleman the Member for Bilston (Mr. Robert Edwards) seems to be in sympathy with this idea.
My hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) expressed very lucidly my thoughts in general on this topic, but I have one or two reservations about certain points, particularly regarding the possibility of the military equipment on Perim. However, I feel very much in sympathy with the proposal made in this Clause. It is both novel and imaginative.
For a number of years I have felt that the ownership of this small island was a matter of very special political and strategic importance. As has been said, the Straits of Bab el Mandeb which separate Perim from the coast of Africa

are less than 20 miles wide. In modern conditions that is a significant figure. Now that so many countries regularly claim territorial waters up to the 12-mile limit, it is clear that if Perim and the territory of Somaliland opposite were to fall into unfriendly hands, exactly the same situation could arise as recently arose in the Straits of Tiran, although, of course, on a much larger and more serious scale. As happened over the Gulf of Aqaba, the Government concerned could claim that the Straits were territorial waters and that, in consequence, the whole of the Red Sea was an internal lake, as was done in the case of the Gulf of Aqaba.
9.15 p.m.
When I was Minister of Defence, 10 years ago, I was much concerned about this possibility and it was at my request that the then Government decided by Order in Council in 1959 for this reason to withdraw responsibility for Perim from the Legislative Council in Aden, and when Aden acceded to the Federation in 1963, then in my capacity as Colonial Secretary I took care to see that Perim was not included in the Federation and therefore remained a separate Colonial Territory outside the Federation of South Arabia. Again in 1964, at the South Arabian Constitutional Conference, I discussed this matter with the representatives of Aden Colony and the other States of the Federation, all of whom agreed that Perim should be left out of the Federation and its future considered separately.
In the last few weeks, we have seen a bitter and bloody war result from the closing of an international waterway by a country which claimed that the entrance to it was territorial waters. If at some future date any country should claim a similar right to close the entrance to the Red Sea, the consequences would be incomparably more serious. By the accident of history, Britain happens to be in a position to make this legally impossible.
I stress the word "legally". This is where I differ slightly from my hon. Friend the Member for Bury St. Edmunds, because I believe that if the United Nations or some other international agency were prepared to take a lease on Perim, it would not be necessary to make a base on this small island.

Mr. Eldon Griffiths: I am glad that my right hon. Friend has raised this issue. I ought to make it absolutely clear that I had no thought of Perim becoming an armed base. On the contrary, I made it specifically clear that that was exactly what I did not want to happen. I mentioned weapons only because of the fear that others would introduce weapons to Perim if there was not an international presence established there to prevent it.

Mr. Sandys: I am grateful to my hon. Friend. I am glad that he has corrected me on that. I was under that impression because he had referred at some length to the air strip and the possibility of basing missiles there.
The important thing is the legal status of Perim, because in these international controversies and conflicts the legal status, the international status, of a territory plays an important part. It played a very big part in the issue which arose over the Gulf of Aqaba the other day. The fact that no country could claim that the entrance to the Red Sea was territorial waters is an important factor to which we should pay attention.
We should, therefore, in my view, retain control over the island until some satisfactory international guarantee can be provided for the free passage of shipping into and out of the Red Sea. The suggestion that Perim might in some way or other be internationalised is extremely attractive. It is not an airy-fairy idea, which can be dismissed as impracticable. It ought to be seriously studied by the Government, and I hope that they will do so. In any case, I am sure that we should think twice before hurriedly divesting ourselves of control of this small island which, because of its unique geographical position, might turn out to be of very exceptional importance.

Viscount Lambton: I would like to support this new Clause. In doing so I can only stress even more some of the arguments submitted to the Committee by my right hon. Friend the Member for Streatham (Mr. Sandys) and my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths), who moved the new Clause so ably.
We have just seen what happened when the war was fought against Israel in Sinai. There has been the most over-

whelming defeat conceivable. I am quite sure that whatever else has resulted from this war there has resulted a determination by Egypt not to repeat the same exercise on a battlefield, where she has twice been overwhelmingly defeated within a week.
At the same time, we know that there is now a greater bitterness in the Arab world towards Israel than there has ever been before. Until the six days' war, the Arab countries detested Israel, but now they doubly detest her because she has defeated them, and it would be absurd to think in any sense that Arabia is still not desirous of destroying Israel, as she tried to do the other day. We can be quite certain, looking pragmatically as we are told to do now, at the situation, that an attempt will be made at a future date to try to destroy Israel.
If one looks at the situation of Perim, one sees that this offers precisely the type of opportunity that the Arab world wants for bottling in Israel without, at the same time, coming within the orbit of Israel. If Perim, Somalia and Aden decided to close these waters, there is very little that Israel could do about it. She could not conceivably send land forces there. If she sent air forces, these forces could do nothing particularly effective, and she has no sea forces.
This is a place which Israel could not control by force from within her own frontiers. It is, therefore, an ideal place for containing Israel. This being the case can we be sure that this will not happen in the future, and ought we not to do everything that we can to ensure that it will not? Earlier, the Minister of State made a slight reference to this, but I am sure that we are to have an explanation from him later as to the attitude of the Government to this new Clause.
It is possible that it will be said that, even if independence is granted on the same basis as that of Aden, this does not preclude, at some future date, the Island of Perim becoming an international unity on its own. What I would argue, with all respect, is that once we give up the sovereignty of the Island of Perim, then we give up the golden opportunity of ensuring that without, international or territorial arguments, it is internationalised. We should not give up our sovereignty over this island other than to an international unit.
Not enough has been said tonight about the troubled position over the coast in Somalia. There we have a really frightening build-up. Somalia is being armed by the Chinese, and has territorial ambitions in Abyssinia, armed by the United States, and Kenya armed by the United Kingdom. We have, therefore, the nucleus of the outbreak of a future local war. In the past, great support has been given by Nasser to the Government of Somalia in their territorial ambitions.
My hon. Friend the Member for Hertford (Lord Balniel) stressed that Nasser would try at some future date to recall the great prestige which he has lost. That is so. There could well be, therefore, at a not too distant date, an association of Somalia and the Aden Federation, if, as some hon. Members fear, it breaks up, in which the two of them decide that it is in the interests of Arabia and of the suppression of Israel that this territory should be used to close the Red Sea to Israeli shipping.
I can only repeat the very simple argument that Her Majesty's Government should make it plain that they are prepared to look at this matter again, and will not merely ask the Opposition to believe that if the Bill goes through Perim can be internationalised later. We do not want to lose the opportunity of having it internationalised without arguments. I hope that we shall have a clear-cut answer from the Minister on this point.

Mr. Dodds-Parker: In view of what has been said by my right hon. and hon. Friends, I will make only two brief supporting points. What I say will in no way contradict my welcome for the independence envisaged in the Bill. But why is it necessary at this moment to divest ourselves of ownership before proper consultation is carried out, not only with the population of these islands, but with future users, which the new Clause suggests might be the United Nations?
There are two instances which may be parallel. St. Kilda, off the North-West Coast of Scotland, was cleared of the population in the 1930s, but we did not divest ourselves of ownership. When Tristan da Cunha blew up four or five years ago, and all the population came off the island, we did not divest ourselves of ownership. Since there is very little

ethnic connection between Perim and the Federation, why is it necessary at this moment to divest ourselves of ownership before we see what can be done with the United Nations?
Secondly, Kamaran has been mentioned in the debate. I went there once. It was a quarantine station run by the Sudan Government with doctors from India and the co-operation of what is now Saudi Arabia. It worked very well for the benefit of all concerned. I know that today, in the conditions of the modern pilgrimage, it is not necessary to have a sea base of that sort. But here is another instance of a territory which is within the prerogative and, therefore, cannot come within the Bill. Perhaps the Minister would say whether international status for Kamaran might be envisaged, if not on this occasion, then at some time in future.
Hon. Gentlemen opposite have welcomed this as a practical suggestion and one way in which we might co-operate with the United Nations. I hope that all of them who have stayed to listen to this discussion will be able to support us on this occasion.

9.30 p.m.

Mr. Michael Clark Hutchison: This is a somewhat sad evening for me, because I think that I am the only hon. Member of the House who was in the Aden Government, and I served there for five years. In my view, all the troubles have arisen because we have not had the courage to govern the place and to make our will known. The villain of the piece behind it all, of course, is Nasser. However, if I continue in that vein I shall be out of order.
As for the future of Perim, it is not really a place of any importance. It is an old coaling station, and, if Aden goes, Perim might as well go, too. I do not believe that there is any point in putting it under the United Nations.
One matter which concerns me is the future of the Red Sea lighthouses which protect shipping. I have raised the matter with the Foreign Office once before, and I have not had an answer. I should be grateful if I could have one this evening.

Mr. Walters: I intervene very briefly to support the Amendment. A number of powerful arguments have been put forward in favour of excluding Perim from


the Bill, but I wish to make one further point, which is really to put the United Nations to the test.
Time and time again, the United Nations has failed in its real operations. We have had to many moralising resolutions and not enough substantive action when its peace-keeping function could have been effective or when its war preventive function would have been desirable.
The United Nations could perform an extremely important rôle by taking over a place which has a great effect on an international waterway, and it would be highly desirable that the United Nations should have to face this reality and respond positively.

Lord Balniel: I intervene briefly in this debate from the Opposition Front Bench to support the arguments which have been advanced by my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) in moving the new Clause and putting forward a novel and worthwhile suggestion for the consideration of the Government. This would be the first step in the history of the United Nations to establish an international trusteeship over an area of immense strategic significance.
That strategic significance lies in the fact that the Island of Perim commands the Straits of Bab el Mandeb. It is here that the Red Sea is funnelled to a breadth of something short of 20 miles, and it is here that the continents of Africa and Asia come together.
It was as long ago as 1857, before the Suez Canal was built but while it was being discussed, that the British statesmen of the time saw the immense strategic importance of the area. As a result, it was annexed by the British Government. Since the building of the Suez Canal, it has become clear that the island lies alongside the most important of all the international maritime channels. The Straits of Bab el Mandeb have a strategic significance which is far greater than that of Sharm el Sheik and, as we all know, in recent weeks, Sharm el Sheik has been the trigger from which the whole of the Middle East has been involved in war. These straits, if held in unfavourable hands, could have a significance fully

comparable with that of the Suez Canal itself.
The Bill as drafted provides for relinquishing sovereignty over the Island of Perim. The Government have said that sovereignty is to be relinquished within a matter of seven months, but during the Second Reading debate the Government spokesman said that they did not even know to whom the sovereignty of the island was to be relinquished. In these circumstances I think we are entitled to ask whether they are certain that freedom of access will be maintained for international shipping, and, equally important, whether overflying rights will be maintained.
This area is obviously unstable, and one can visualise it falling under Soviet influence, or into the hands of her client state Egypt. Even if it is held by a strong Federal Government, are the Government certain that an Arab Government will not close the Straits of Bab el Mandeb to Israeli shipping? If they do, they will implement the fears which my hon. Friend the Member for Berwick-on-weed (Viscount Lambton) has advanced. It will be easy for them to close the Straits of Bab el Mandeb, and at the same time keep the Suez Canal closed to Israeli shipping. This will be outwith the reach of the State of Israel, and they will have achieved the bottling up of the Israeli shipping, a fear which led to the recent war.
Articles 77 and 82 of the United Nations Charter specifically make provision for the United Nations to accept and administer territories of strategic significance. I believe that if this area was maintained by an international presence many of the fears of the international maritime community would be allayed. The purpose of the Clause is not to establish a military base, but to see that a military base is not established here by other persons, that guns are not sighted on the Island of Perim, which would sweep the straits which open into the Red Sea.
This seems to us pre-eminently a task for the United Nations, and the Clause is designed to give the Government the opportunity, should they so wish, of giving the sovereignty of this territory to the United Nations, and so ensuring for all time that international shipping is allowed


access through the straits, and international overflying rights are maintained.

The Secretary of State for Foreign Affairs (Mr. George Brown): I have seldom heard a debate which I have enjoyed and agreed with more. From the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) to the right hon. Member for Streatham (Mr. Sandys), the noble Lord the Member for Berwick-onTweed (Viscount Lambton) and the noble Lord the Member for Hertford (Lord Balniel), we have heard nothing but praise and commendation for the United Nations. There has not been a conversion like this since Saul went up to Tarsus.
I am very impressed. I wholly welcome it. I wholly agree with it and I hope that I shall have the support of all these right hon. and hon. Gentleman when we bring it about. All I say to them is that the Amendments are misconceived. They are not required. The Bill allows us to internationalise the Island of Perim. We do not need any Amendments for that purpose. That we can do.
I shall have the very greatest pleasure in conveying to the responsible authorities that we have absolute, unanimous approval from those who have hitherto rather been withholding their approval. For internationalising this island we do not need any Amendment to the Bill—so long as there in not here any arriere-pensee; and the only hon. Gentleman who let the cat out of the bag was the noble Lord the Member for Berwick-upon-Tweed, who talked a little less carefully than others about the retention of a British possession in this area; and I suspect that this is what is really in the minds of hon. and right hon. Members opposite, for I cannot believe in a conversion as complete and as sudden as this. It does not normally happen.

Viscount Lambton: Would the right hon. Gentleman say what he means by that? On no occasion whatever have I ever suggested that. This territory should go under the United Nations. The only reason we should hold on to it was to ensure that it went to the United Nations and did not enter the field of argument so that others could put a claim to it first.

Mr. Brown: What the noble Lord, to his credit, said was that we should hold

on to it. What his hon. Friends were very careful not to say was that we should hold on to it.

Lord Balniel: Lord Balniel rose—

Mr. Brown: May I go on, one sentence at a time, and deal with the noble Lord—one noble Lord at a time, if they do not mind?
The Bill leaves us totally free to negotiate an internationalised arrangement for the Island of Perim and we do not need any Amendment to enable us to do that. The only purpose for which we would need an Amendment—this is what I am making quite clear—the noble Lord the Member for Berwick-upon-Tweed alone was honest enough to say so—would be if we wanted to keep British possession of the island after South Arabia becomes independent.

Lord Balniel: It must be patently obvious to the House that the Foreign Secretary has not read the new Clause, because the Clause is so designed that
Her Majesty may, on the advice of the Secretary of State for Foreign Affairs, lease the island of Perim to the United Nations".

Mr. Brown: How does one lease anything unless one has the ownership of it?

Lord Balniel: Lord Balniel rose—

Mr. Brown: No. Wait one second. The noble Lord, unlike me, has much experience of owning things and leasing them to other people—[HON. MEMBERS: "Really."]—but one cannot lease something unless one retains ownership. By definition one cannot. I understand the new Clause very clearly. The noble Lord the Member for Hertford tried to hide it. The noble Lord the Member for Berwick-upon-Tweed was very honest with the House. What the Amendment seeks to do is to call upon us to retain the ownership of the island and lease it on some terms to somebody else.

Lord Balniel: Will the right hon. Gentleman give way?

Mr. Brown: I will in a moment, most certainly. Anyhow, we are in Committee, and the noble Lord has plenty of time, and I am not in a hurry, but I want to get the argument clear.
We have all heard this about the United Nations, and about this wonderful conversion, which I accepted. On the


other hand, I wondered why; I was a bit surprised; so I read the new Clause. Of course, I listened to the noble Lord the Member for Berwick-upon-Tweed, who gave it away.
9.45 p.m.
The argument is for internationalisation which the Bill as it stands allows us to do. The desire is to retain the ownership and then have the power to lease it to somebody else. But if nobody takes up the lease, the ownership remains with us. With respect, I think that this is what right hon. and hon. Gentlemen opposite are after. They want to ensure that the Island of Perim remains owned by Britain after South Arabia has become independent—

Viscount Lambton: Viscount Lambton rose—

Lord Balniel: Lord Balniel rose—

Mr. Brown: Wait a moment. Let me finish the argument. All right. Does the noble Lord want to get up?

Lord Balniel: I am grateful to the right hon. Gentleman for giving way, because I can explain to him why the new Clause is drafted in this way. It is drafted to conform as closely as we can with Article 77(1,c) of the United Nations Charter.

Mr. Brown: Having said that, the fact remains that the ownership of the island would remain with Britain after we had conceded independence to South Arabia—

Mr. John Biggs-Davison: Mr. John Biggs-Davison (Chigwell) rose—

Viscount Lambton: Viscount Lambton rose—

Mr. Brown: One at a time. I am answering this noble Lord at the moment.
The United Nations resolution—if one noble Lord will stop winking at the other noble Lord, we can deal with the matter—was absolutely clear about this. It was that the islands, of which this is one, should go with South Arabia—

Lord Balniel: No.

Mr. Brown: Yes, it was. The resolution said that the islands and South Arabia should go together. Hon. Gentlemen opposite who know about these things know as well as I do that we should

be in conflict with the resolution which they are pretending to be supporting if we were to divorce one from the other. At the moment of independence we could not possibly retain British alleged ownership of that island and present ourselves at the United Nations as being in accord with the United Nations resolution about independence.
If, between now and then, we can negotiate for the internationalisation of the island of Perim, I am wholly in favour of it—

Viscount Lambton: Viscount Lambton rose—

Mr. Brown: Wait a minute.
I will use everything I can to bring it about. If the United Nations, at that stage, has not been willing to take it, I am not willing to retain it in British ownership after that date, because on that date independence comes to South Arabia, and on that date the Island of Perim goes with the mainland and South Arabia, I think that I would be in total conflict with everything if I were to try to keep the one thing which right hon. and hon. Gentlemen said they do not want, and I would then have to keep—

Mr. Eldon Griffiths: Mr. Eldon Griffiths rose—

Mr. Brown: May I make the argument? I have listened carefully to everyone who has spoken.
If, on that date, I tried to keep that island in British ownership after the date of independence for South Arabia, I would have to put a base on it. It has no water—

Mr. Eldon Griffiths: But there are people on it.

Mr. Brown: Yes, as the hon. Gentleman says, there are 300 or 400 people who live there. We would have to create all the installations—

An Hon. Member: What do they drink? [Laughter.]

Mr. Brown: May I ask the House, if we are taking this argument seriously—if it was intended seriously, and I do not know if it was—how would we present ourselves to the world, having allegedly given independence to South Arabia and then create a base with all the installations required and all the ancillary requirements—[Interruption.] Let us examine the


argument that we do not create a base on it but retain it in our possession and ownership so that, as has been said from the other side, we deny it to someone else. We would have to create something on it. We could not just leave it as a fishing harbour. We would need to have some people there. It could not be done. The whole argument is a nonsense, except as a way of trying to frustrate our intention of conceding independence to South Arabia.
Having said that much, and having made it quite clear that, in my view, on the date on which independence comes to South Arabia independence must also come to Perim, nevertheless I will certainly go to the United Nations and tell them of the touching devotion of hon. and right hon. Members to them, and do what I can to ensure the island's internationalisation under United Nations auspices in the meantime.

Viscount Lambton: Before the right hon. Gentleman sits down—

The Deputy Chairman: I think that the Foreign Secretary has sat down.

Mr. Michael Foot: I would say, if I may, with respect to my right hon. Friend, that he is absolutely right in his argument. He may have thought when, at the beginning of his speech, he indicated that he accepted some of the arguments of hon. Members opposite that it might deter me from expressing my approval, but that is not the case. I believe that what he said is perfectly right, and it should have been accepted in a quite different sense by hon. Members opposite, if, indeed, they were serious in their proposition.
I must confess that before the debate tonight I had never heard of Perim, and others may share my ignorance—or rather, the only thing I can recall of it is the famous song:
East West, North South,
'Frisco to Perim,
Wherever Capt. John Macpherson went
The girls were after him.
They chased him, pursued him,
They would not let him free,
'Till Captain John Macpherson cursed the day he went to sea.

It may be that if we were to retain Perim on the terms recommended by some hon. Members opposite we would curse it, too—

Viscount Lambton: I must interrupt the hon. Member. I think that both he and the Foreign Secretary have done a considerable disservice to the House of Commons tonight.

Mr. Foot: I will deal with the noble Lord's argument. I have said, and I agree entirely with my right hon. Friend the Foreign Secretary, that if the proposal of hon. and right hon. Members opposite was intended seriously it is reasonable that it should be accepted in that sense, but it is quite clear from what has been said by some of them—and, in particular, by the noble Lord—that their proposal is different from that of the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths), who made the original proposal. I will come to the actual proposal in a minute and argue how best it can be put into operation, because I think that it contains considerable validity. I have never heard it before, but I listened to the hon. Gentleman and if it is a serious argument I entirely agree with the Foreign Secretary, but if the argument is coupled with a proposal for British ownership it will destroy the whole idea.
Hon. Members opposite must not complain if the Foreign Secretary and the rest of us are, at any rate, suspicious of the auspices under which this proposal is put forward. I am not talking so much about the hon. Member for Bury St. Edmunds, although I do not wish to acquit him altogether, but look at the others. A proposal to assist the United Nations, coming from the hon. Member for Chigwell (Mr. Biggs-Davison), does not sound very convincing. Indeed, his fame here is in considerable part associated with his persistent attacks on the United Nations. He has made several converts, as the Foreign Secretary has underlined. The noble Lord the hon. Member for Berwick-upon-Tweed (Viscount Lambton) is never a great supporter of the United Nations, nor is the right hon. Member for Streatham (Mr. Sandys). So we are entitled to some original suspicions when they come forward with a proposal for putting this island into the hands of the United Nations.

Mr. Walters: Is it not perfectly legitimate to criticise the United Nations for double standards and moralising platitudes and yet to ask the United Nations to do something effective?

Mr. Foot: It might be possible, but I think I am not making an exaggerated statement of the case. All I am saying is that when proposals to assist the United Nations are put forward in the names of some hon. Members to whom I have referred we are entitled to start with some suspicions.

Viscount Lambton: May I do away with the hon. Member's suspicions by saying that I think I speak for all hon. Members on this side of the Committee in saying that, had the Foreign Secretary generously welcomed our offer as genuine and taken it in the spirit in which it was made, there would have been unanimous support for this suggestion?

Mr. Foot: The Foreign Secretary pointed out the defects in the proposition which has been put forward. He went on to show how the matter could be better advanced. If hon. Members opposite are serious in putting forward this proposal and in desiring that the outcome of this debate should be that Perim should be an island owned by the United Nations under some kind of original charter—

Viscount Lambton: Viscount Lambton indicated assent.

Mr. Foot: If that is the serious proposal, and the noble Lord nods his head, I suggest in all seriousness that the only way to achieve that end is to follow what the Foreign Secretary has put to the Committee and not what has been said by hon. Members opposite. Whatever may be their intentions, if the Committee accepted Amendment No. 7 and later passed the new Clause, the position, as the Foreign Secretary rightly said, would be that this country would retain ownership of this island after the date of independence for the other territories. If that were so, most people in that part of the world—at any rate many people in the Arab countries; I do not want to state the argument too strongly—would say that so far from the purpose being to assist the international organisation it was for the purpose of retaining British sovereignty for a period in that area despite all protestations to the contrary.
If any hon. Member does not think that would be the suspicion of many in the Arab countries and does not think that would be the propaganda spread from Cairo Radio, he is underrating the capacity of President Nasser to spread propaganda on these matters. If hon. Members opposite want to achieve the end which they say they want, they should withdraw these Amendments. That would be proof of their sincerity in the matter. The Foreign Secretary has made a very good proposal, that in the interim between the passage of this Bill and independence being carried through he will present, in whatever form may be most appropriate at the United Nations, a proposal that this island should be put under some form of international trusteeship.
It would be much better to do that and then there would be no question of Britain seeking to retain sovereignty over the island. If the Committee supports what we are told is the intention of the Amendment it will unanimously agree with the course of procedure the Foreign Secretary has suggested, but if a different course were taken and hon. Members opposite insisted on voting for the new Clause that would be a revelation that their purpose is not to secure the strengthening of the United Nations or the transfer of this territory to the United Nations but an entirely different purpose. Therefore, to prove their good faith they should not vote for the Amendment.

Lord Balniel: Perhaps I may be allowed to refer to various remarks the Foreign Secretary made in a debate on a serious contribution put forward as a novel and worth while attempt to create in a highly strategic area a trusteeship territory which would command the confidence of the international community.

It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

BUSINESS OF THE HOUSE

Ordered,
That the Proceedings on the Aden, Perim and Kuria Muria Islands Bill and on the Bermuda Constitution Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Harper.]

ADEN, PERIM AND KURIA MURIA ISLANDS BILL

Again considered in Committee.

Lord Balniel: The Foreign Secretary said absolutely categorically that the Island of Perim was, when British sovereignty lad been relinquished, to be transferred to the Federation of South Arabia. This was a clear statement. It was not the statement made on Second Reading by the Under-Secretary of State for Foreign Affairs, who clearly said:
We have not yet undertaken any formal consultations with the inhabitants, which we will obviously have to do before deciding their precise destination."—[OFFICIAL REPORT, 19th June, 1967; Vol. 748, c. 1265.]
The ultimate destiny of the Island of Perim is not certainly with the Federation. It is not a member of the Federation at the moment. There is little in its history which leads one to believe that it will automatically wish of its own volition to become a member of the Federation.
There is another argument to which the Foreign Secretary did not address himself but which was raised earlier in the debate. It is that for the past 100 years the sovereignty of the Island of Perim has rested in British hands. But in the present year the Yemen Republican Government have claimed the sovereignty of the island. They have claimed to extend—of course we reject the claim—their territorial waters from the previous three-mile limit to a 12-mile limit. This would bring the Island of Perim within the sovereignty of Yemen.
Therefore, were the Island of Perim to enter into the Federation, on the very day on which the Federation was to achieve independence she would be involved in a territorial dispute with the Yemen. Anyone can see how dangerous such a situation could be for the independent Federation.
On Second Reading we raised this question of transferring the lease of the Island of Perim to the United Nations. The Minister of State gave a firm undertaking that he would give consideration to this proposal. I am disappointed if the Foreign Secretary's speech tonight is the serious consideration which he has given to our very worthwhile suggestion. It seems that absolutely no consideration

has been given to the proposal. The right hon. Gentleman is mistaken in believing that this matter can be decided in the indefinite future. Once British sovereignty has been transferred, be it to the independent Federation or to any other nation, it does not lie within our gift to transfer this property to the United Nations.
I should like the right hon. Gentleman also to give the House an assurance that he will be able to secure the passage of Israeli ships through the Straits of Bab el Mandeb. As my noble Friend the Member for Berwick-upon-Tweed (Viscount Lambton) pointed out, with the Suez Canal closed to Israeli shipping, were these straits also to be closed to them, Israeli shipping would be completely bottled up. There would be no access to Israel, either through the Suez Canal or through the Red Sea and the Straits of Aqaba. Bearing in mind that it was the closing of Sharm el Sheikh which led to the recent war, it is clear that our proposal is a serious one worthy of consideration by the Foreign Secretary.
In spite of the tone of the right hon. Gentleman's remarks, I shall take him at his word. Like the hon. Gentleman the Member for Ebbw Vale (Mr. Michael Foot), I shall trust him, and, if he will give a firm assurance that he will raise the matter at the United Nations along the lines of our new Clause, I shall advise my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths), though it is entirely a matter for him, that we should accept the Foreign Secretary's word and ask leave to withdraw the Amendment.

Mr. Stanley Henig: When my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) announced revealingly that, until this debate, he had not heard of Perim, I had a sneaking suspicion that he might not be the only one, and I had another suspicion that the sudden love of the Opposition for this little island might have more to do with embarrassing my right hon. Friend the Foreign Secretary than anything else.
Oddly enough, I had heard of Perim in one connection, when one of the leaders of a nationalist group in Aden, a leader of F.L.O.S.Y., announced some months ago that, if and when Aden became independent, he intended that,


through control of Perim, Israel should be throttled. Given the likely naval and military strength of the South Arabian Federation immediately after independence, one does not regard that as an immediate threat, but perhaps there is something in it.
A lot of this debate has centred round the United Nations, but I suspect that we have all been kidding ourselves. No one will say in Committee that we do not want Perim to be internationalised. We would love Perim to be internationalised. We would love everything to be internationalised. But I doubt that any such talk is very practical at the moment, when the real task is to save the United Nations from an extinction which the events of the last few weeks has made seem ever nearer.
I doubt that the United Nations is at the moment in any shape to be able to take over this responsibility, even assuming that one could, by some magic, create the political will on the part of the great Powers, let alone the smaller ones and some of the Arab States in the area. Let us face facts. If we imagine that, all of a sudden, the United Nations will achieve the necessary unanimity to undertake this task, we are living in cloud-cuckoo-land.
Nevertheless, we have a legitimate right to concern ourselves for the future of this area. My right hon. Friend put his finger on the spot when he suggested that some hon. Members opposite foresaw that British sovereignty would continue, perhaps, as a result of failure by the United Nations to act along the lines proposed in the new Clause, in which case, were the House to accept all that has been proposed by the Opposition, we should, in six or seven months, no doubt, find British sovereignty over Perim still continuing. I do not regard that as too terrible a prospect. In my view, British sovereignty need not necessarily be a dirty idea, although exactly what the cost of such an operation would be I do not know.
I conclude by putting an important question to my right hon. Friend. I am sure that no one here or the country particularly wants Britain to control Perim. Indeed, I do not suppose that many people are much bothered about what happens to it. But a great many

people, after the events of the last few weeks, are bothered about the possible threat of another flare-up in the Middle East. It happened at Sharm el Sheikh and perhaps it could happen again at Perim, though the straits there are much wider.
What does my right hon. Friend consider to be the likelihood that through control of Perim the South Arabian Federation would be able physically to do what is suggested, if it wished, within the reasonably foreseeable future—let us say within the next four or five years? One sincerely hopes that after that the Middle East will move towards a more peaceful state. What does he think about the possibilities and dangers?
If that may be done in the next four or five years when we might be able to prevent it by a continuing presence for that period at not too great a cost, it might be reason to think again. I ask my right hon. Friend to comment on his assessment of the danger of the straits being used in the kind of way indicated.

Mr. Sandys: I should be prepared to follow the advice of my noble Friend and not press the new Clause, but I think that it would be helpful to the House, in view of the perhaps slightly lighthearted tone of the Foreign Secretary's speech, if he would say a few more words about his intention to raise the matter at the United Nations.
The Clause refers to a "lease". The lease is in accordance with the Charter, but I do not imagine—I wonder whether I could have the right hon. Gentleman's attention—that any of my hon. Friends attach all that much importance to a lease or in what exact form Perim is internationalised. What we consider very important, and I felt that perhaps the Foreign Secretary did not attach sufficient importance to this, was that we should take the opportunity which an accident of history has given us to keep this vital waterway open for a long time ahead.
We have this opportunity and once we have given up sovereignty the opportunity is gone. In my view, the certainty will follow that this territory on both sides of the straits will come into some form of Arab hands. I have nothing against the Arabs, but there are situations in which they may very well decide to do exactly as they did in the Gulf of Aqaba.


Many of us would not have pressed the point so much if it had not been for the events of the past few weeks, which have pointed the lesson and drawn our attention to the extreme importance of Perim.
As I told the Committee, I have taken an interest in this problem for a number of years, and I wrote to the Foreign Secretary about it the other day. I think that it is in everybody's mind at the moment. The opportunity we have to safeguard the rights of shipping through these important straits is so important that I do not believe that in solving the problem our actions should be dictated entirely by a date which happens to have been fixed for the independence of South Arabia.
It may well be that between now and January it is not possible to get the United Nations, which we know moves very slowly, to take on this responsibility. It may be necessary to find another international agency to assume this responsibility, perhaps as an interim measure while the United Nations considers the matter.
I urge the Foreign Secretary not to be fixed too hard and fast by this date. I am not talking about Aden, but the possibility of safeguarding this vital waterway, and I do not think that it is necessary that the two things should be linked. If we decide to retain sovereignty over Perim for a little longer I cannot see that anybody will attack the decision. What matters is not its defence but the legal status of Perim, which makes it impossible for any country afterwards to argue that it has a right to close the straits.
That is the point that I am trying to make. I hope that the Foreign Secretary will help us and allow us, with a lighter heart, not to press the Clause, and to feel that he is really serious in his intention to take up the matter at the United Nations.

10.15 p.m.

Mr. Geoffrey Wilson: I wish to intervene for only two or three moments. Unlike the hon. Member for Ebbw Vale (Mr. Michael Foot), I have heard of Perim nearly all my life. One of my earliest recollections is seeing it in 1909, when I was six years old. A liner had piled up on it.
Anyone who has seen Perim—and I hope that other hon. Members have—will appreciate what an important island it is, not only strategically but from the point of view of navigational hazard. I hope that a satisfactory arrangement about it can be made which will not allow it to pass into the hands of any ill-disposed Government, because it could cause a great deal of trouble in these straits if it were in the wrong hands.

Mr. Brown: Perhaps it would be convenient for me to reply now to what the right hon. Member for Streatham (Mr. Sandys) has just said. If my tone earlier was too lighthearted, I am sad about that. On the other hand, I thought that it fitted in with what I was hearing at the time.
There is a problem between us and I would rather not fluff it or hide it. Whether it helps or does not help the right hon. Gentleman, we had better be clear about it. I am absolutely serious that I will make every endeavour to get Perim under some form of international United Nations administration, control, organisation, or whatever it might be, between now and the date when we surrender sovereignty over South Arabia. I will try very hard. I take this to be the desire of the Committee and I will certainly try hard to bring it about.
I think that the issue which divides us is that I cannot undertake, and will not undertake, to maintain British ownership of the island thereafter, for the reasons which I tried to give earlier and which my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) followed up. On the other hand, the right hon. Gentleman said that there may be other arrangements that one could make which would not involve that.
I say to the right hon. Gentleman quite sincerely that I will discuss this with the South Arabian authorities and with the United Nations to see whether there is some other arrangement that we could make. If that is acceptable to right hon. and hon. Members opposite, I will operate on this basis and this little debate, which I tried to give earlier and which my been very useful all round.

Mr. Sandys: I ask the Foreign Secretary to clarify one point. He has made a very helpful intervention and I think that he has impressed the Committee


that he means seriously to try to bring about a solution such as we have in mind.

Mr. Brown: Mr. Brown indicated assent.

Mr. Sandys: The right hon. Gentleman said that he could not undertake to allow British sovereignty to continue after the date of independence for South Arabia, even for this purpose. I do not think that we would expect him to give an undertaking of that kind at this moment, but can we take it that he is not doing the converse—taking the view that in no circumstances would he consider allowing sovereignty over Perim to continue after the independence of South Arabia?
It may well be that, at that time, he will be making progress in securing some internationalisation of Perim. I think that he will find it difficult to do it in the time available but, if he is making progress and sees such possibilities, I hope that he would not feel himself rigidly bound on this issue. I do not ask him for an undertaking, but that he should not bind himself in such circumstances.

Mr. Brown: Quite frankly, I cannot think of any circumstances in which I would want to recommend the House to retain sovereignty of that island after the date of independence. The right hon. Gentleman asks whether I am binding my successor's hands for all time. The answer is that no one can do that. I do not want the House to think I am misleading it. I literally cannot at this moment think of circumstances in which I would want to recommend that we gave up independence to South Arabia and yet retained sovereignty over that island. Subject to having said that openly and honestly, no one binds one's hands totally six months ahead.

Mr. Eldon Griffiths: The Foreign Secretary has made an important and very helpful statement. I understand now that it is the policy of Her Majesty's Government to achieve the internationalisation, under the United Nations, of the Island of Perim. He has said that he expects to achieve this, if it can be achieved, by the date of independence of the Arabian Federation, but—[An HON. MEMBER: "He did not say that."] I beg pardon—that he did not seek to achieve this by the date of independence of the Arabian Federation. I accept gladly the sincerity of what he has told the House. I could quite easily comment on the levity with which he opened his remarks, but this is too important a matter to seek to score party capital either way.
We have argued, and I ask hon. Gentlemen opposite to accept, whatever they may say about conversions, that we are interested in maintaining freedom of passage for international shipping. We are seeking to deny this strategic territory to anyone who would abuse it. We are seeking beyond that to give some physical reality on the ground to the United Nations which, lacking that physical reality, has often been less able to operate effectively than some of us would have liked.
On the understanding that it is now the policy of Her Majesty's Government to achieve internationalisation of Perim, if it can be done, and that the Foreign Secretary is not binding himself to say that if negotiations are under way at the crucial date he will not then say that they must fail because there is a deadline, I would offer thanks to him for what he has said.
In the belief that a good step has been taken tonight, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

Mr. Francis Noel-Baker: It has never been my view that debates after 10 o'clock are better than debates before that hour and it is not my intention to detain the Committee for very long.
In discussing the first group of Amendments we addressed ourselves principally to the security situation in Aden and in the Federation and to the defence commitments that the British Government had undertaken. I cannot say that my right hon. Friend's reply satisfied me as much as I had hoped. I repeat—I think it is the third time he has heard it today—that I am in a very distressing state. I fear that I will have to oppose the Government before we conclude our business on this Bill unless he can satisfy me that he and his right hon. Friend are prepared to reconsider the change of policy announced 10 days ago in the hope of ensuring United Nations help in reaching a political settlement and participation in South Arabia before we pull out.
It has always been my belief—and I understood it was the belief of the Government until 12 days ago—that the Federation with which we have been saddled by the arrangement made by the right hon. Member for Streatham (Mr. Sandys) was unworkable and that the present Government of the Federation was unrepresentative, undemocratic and unacceptable to the people of Aden and probably to many of the people in the sheikdoms as well on the ground that, as soon as British power is removed from the sheiks, many of the political arrangements in other parts of the Federation will collapse, as will the arrangement in Aden.
At one time I thought that the British Government accepted the need for the replacement of the Federal Government by an entirely new Government in which the nationalists would be represented in proportion to their real political strength and in which members of the existing Federal Government might be represented, but in proportion to their real strength, which is very different from the situation today. I thought that it was the intention of the British Government to seek the complete overhaul of the present arrangements and to have negotiations with the nationalists.
There is a great dilemma here and we saw it very clearly during the six years of the Cyprus emergency. It is very difficult—I would say that it was impossible—for a Government to seek to fight terrorism by the use of troops and security forces and simultaneously to conduct negotiations with the leaders of the terrorists themselves. This dilemma was clearly illustrated by the farcical treatment meted out to the United Nations Mission which went to Aden some weeks ago.
It may be that that Mission did not prepare the ground very well and did not appreciate the conditions in which it would find itself, but the fact of the matter is that the British Government treated it in a farcical manner. Having heard both the Mission and the Foreign Secretary describe what happened to the Mission in London and at Dorneywood, I do not think that it was very well handled in this country, and that appears to be recognised by the fact that Sir Richard Turnbull was removed and Sir Humphrey Trevelyan, who happens to be an old and fairly close friend of mine, was sent to be High Commissioner instead.
I repeat that it is impossible for the Government effectively to suppress what they describe as a terrorist campaign and simultaneously to negotiate with the political leaders of the terrorists themselves. That is why I believed from the beginning of this situation, and still believe, that the only way out of the dilemma for the British Government is to use the United Nations, which could conduct negotiations with the political leaders of the nationalist elements in a way we could never hope to do while fighting a campaign for what we describe as the restoration of law and order. I had thought that the Government's attitude was the same as mine and that, whatever criticisms they might have levelled at the Committee of 24, or the members of the United Nations Mission, they believed that the use of the Mission was the first stage in getting United Nations help in negotiating a new political settlement.
The Foreign Secretary said that he had seen Dr. Perez-Guerrero in New York last week, and either he or my right hon. Friend the Minister of State made a slightly offhand reference to my


"fleeting" visit to New York. My right hon. Friend knows very well that it was fleeting because I wanted to be back for the Aden debate on Monday. If I may reply in kind, very often the visits of Foreign Ministers and Prime Ministers from this country to the United Nations are very much too fleeting. To fly over, deliver a speech, have a couple of conversations with the Secretary-General and the Chairman of the Mission and come back again is not the way in which the the United Nations ought to be worked.
10.30 p.m.
I remember in the early days, when Ernie Bevin was Foreign Secretary and Clem Attlee was Prime Minister, they would spend days, sometimes weeks on end, at the United Nations, negotiating and settling international problems of these kinds. In any case, after my fleeting visit, and after the Foreign Secretary had talked to Dr. Perez-Guerrero, I spoke to him yesterday, and all that I can say is that my impression is that the statement of policy made a few days ago came as great a shock to the United Nations and the United Nations Mission as it did to my hon. Friends and other hon. Members of this House.
I should like my right hon. Friend to give an assurance that we will give absolute priority to the United Nations in these negotiations. There have been many complaints about the difficulties in negotiating with F.L.O.S.Y., about messages that a F.L.O.S.Y. emissary is to come to meet some emissary of the British Government somewhere, and does not turn up, and similar difficulties with the N.L.F. As I have tried to explain, this is inevitable in the situation in which the British Government find themselves.
This is why I think that the United Nations is the only hope of getting sensible negotiations started which might lead to a political settlement. The emergency with which we are now coping started when the Federation was set up by the right hon. Gentleman the Member for Streatham, who spoke earlier in the debate, and the only way in which we can have effective negotiations with the nationalists, the only way in which we can get a more representative Government set up, the only way in which we can have a Government in power in

Aden and South Arabia at the time that we pull out, which will stand a chance of maintaining law and order and allowing us to extricate our troops and such civilians as come out, in a decent and sensible and peaceful way, is by using the United Nations to help us to set up that Government. That process has to start with the report of the United Nations Special Mission on Aden, headed by Ambassador Perez-Guerrero.
The Government should be much more serious about their intention to use the U.N. and should allow Lord Shackleton and Sir Humphrey Trevelyan to go to the U.N. to meet the Secretary-General, to talk to delegations there and to the Aden Special Mission, and I am very sorry that this has not yet been arranged. The U.N. should have played a most important rôle—it is doubtful if this is possible now—in ensuring that we can have effective political negotiations for getting a new representative government in Aden. These could have led to a physical United Nations presence in the area, and this is of some relevance to the previous debate. It could have played a crucial rôle in getting acceptance for an independent Southern Arabia on a common basis by the neighbouring countries and skated round the problem of what relations South Arabia and Aden are to have after independence with the Yemen, Aden., Saudi Arabia and other countries.
I am very apprehensive about the course of this debate. But I make one last appeal to my right hon. Friend to make it clear that the Government are prepared to reconsider the policy which the Foreign Secretary announced 10 days ago, in the interests of using the United Nations to settle this problem. If he is not able to do that, I have to repeat what I have told him earlier, that I shall find myself voting against the Government on this Clause.

Mr. James Davidson: I have listened to virtually the whole of this debate with great interest. No doubt the Minister will have noticed that some of my hon. Friends and myself tabled Amendment No. 11, which was not called, but he will know from this Amendment what the theme of my remarks will be.
On this Liberal bench we have not proposed that the election date should


be postponed. We are only too well aware that this leaves us just six months to stabilise the situation and, in spite of what the hon. Member for Swindon (Mr. Francis Noel-Baker) has said, I do not see any immediate prospect of our getting very much help from the United Nations in doing this, although I have not given up hope for the future of the United Nations.
We on this bench are utterly convinced that this Bill, which hands British control to Aden after forcing the former Colony into a shot-gun marriage with the sheikdoms of South Arabia, will prove disastrous. It is for this reason that we ask the Government to consider organising a referendum to allow the people of Aden—the Arabs, the Yemenis, the Somalis, and the Indians—to decide their own political future and whether or not they wish to remain part of the South Arabian Federation. There is still time to do it before the appointed day, which quite clearly is to be 9th January. However difficult it might seem at the moment in the present hostile climate, I believe that it is possible to conduct such a referendum, and it is essential if any form of representative Government is to exist. The worst that could happen is a boycott of such a referendum by F.L.O.S.Y. and the N.L.F., and this would certainly be no worse than their present obvious reluctance to negotiate with ourselves, the United Nations Mission or, for that matter, with the Federal Government:
On 4th August, 1966, when I asked for a referendum on Gibraltar, the Under-Secretary of State for the Colonies replied:
I do not believe that any form of referendum would be helpful at present. Adequate arrangements exist for the people of Gibraltar to make their views known through their elected representatives."—[OFFICIAL REPORT, 4th August, 1966; Vol. 733, c. 157.]
What, then, has caused the Government to change their mind? Surely the case for a referendum in Aden is even stronger, because in Aden there are not adequate arrangements—

The Chairman (Sir Eric Fletcher): Order. I must remind the hon. Gentleman that, in a debate on the Question, "That the Clause stand part of the Bill," he cannot argue the merits of an Amendment which has not been selected.

Mr. Davidson: Sir Eric, this Clause is a very wide one covering the whole sphere of withdrawal from Aden. With respect, I think that I am well within the meaning of the Clause in the argument which I am pursuing.

The Chairman: The hon. Gentleman is mistaken. He can make an incidental reference to a referendum, which he has done already, but in a debate on the Question "That the Clause stand part of the Bill," he cannot argue the case for a referendum.

Mr. Davidson: I am arguing the case for a delayed withdrawal from Aden, or a withdrawal under certain conditions, which is the purpose of the Clause. In Aden, there is no channel at the moment for the people to make known through their elected representatives how they want to be governed. The alternative also will be a bloodbath. It would be very much easier for the British to organise a referendum during the six months which remain before the appointed day—

Mr. Goodhart: Mr. Goodhart rose—

Mr. Davidson: Perhaps the hon. Gentleman will allow me to finish this part of my argument, and then I will give way to him. It would be better for us to organise such a referendum to stabilise the position in Aden before we get out, under Clause 1, rather than leaving a caretaker Government to sort out the mess later with British V-bombers.

Mr. Goodhart: Given that there are six months left, what questions would be asked in the hon. Gentleman's proposed referendum?

Mr. Davidson: I said in a speech in the House on 20th March—and the theme has been followed since by certain of my right hon. and hon. Friends—that we believe that the present Federation is not viable, that to move out in its present state is asking for trouble, that sooner or later it will break up and Aden itself will wish to opt out, and that we should, therefore, give her the opportunity to do so now, rather than getting out and expecting it to happen later on.
It could be argued that there is no indigenous movement towards the


separation of Aden from the Federation, but my information is to the contrary, and its source is exceptionally good, though I am not at liberty to disclose it—[HON. MEMBERS: "Oh."] In any case, was not Abdul Mackawee, the former Chief Minister of Aden and now leader of F.L.O.S.Y., dismissed for the reason, amongst others, that he could not agree to the federation of Aden with the South Arabian sheikdoms? Does the Minister not recall—

Mr. George Thomson: That is simply not so.

Mr. Davidson: That is the information which I have. If I am wrong, I beg leave to withdraw the remark. But I understood that one of the reasons why Abdul Mackawee was dismissed was because he refused to agree with the federation of Aden with the South Arabian sheikdoms. If there is disagreement on this point, hon. Members are entitled to disagree, but I would remind the Minister that on 11th February, when Federation Day was supposed to be celebrated, it was used as a day of protest in Aden, which is evidence of their unwillingness to be swallowed up by this Federation. Have the Government forgotten the events of 1950 leading up to the Central African Federation? This Federation was doomed before it ever got under way, because it was opposed unremittingly by African nationalist leaders who were not even consulted before it was set up.
If the basis of wisdom is to some extent an ability to profit by past mistakes, then I suggest that the Government are faced with an unparalleled opportunity. I am not suggesting that any particular party has a monopoly of all the mistakes which have been made in the past in our attempts as a nation to control the rapid disintegration of the former British Empire. Possibly the first was made by a Liberal Government in 1909 by passing an Act which gave independence to South Africa on far too narrow a franchise. Nevertheless, the world is littered with the fragments of ill-founded federations, many of them built on the shifting "sandys" to which my right hon. Friend the Member for Devon, North (Mr. Thorpe) referred in a speech in this House on the 19th of

this month. We believe that this Bill is the foundation-stone of another jerrybuilt Federation which will also crumble and collapse very soon after the builders depart, and we ask the Government to pause and to think again very carefully before it is too late.
There is another even more obvious lesson to be learned from recent events in the Middle East. I cannot agree with the Secretary of State for Defence who said in this House on 31st May:
I fail to see how what is happening in May this year 1,000 miles to the north of Aden need affect our plans about what we do in Aden next year."—[OFFICIAL REPORT, 31st May, 1967; Vol. 747, c. 67.)
I believe that the right hon. Gentleman's argument has been disproved by what has been said from the Front Bench opposite during the debate today.
Obviously the events are very intimately linked. Not only is Egypt closely involved in both situations, but the oil refinery in Aden is mainly dependent on sources which have been severed as a direct result of the Israeli-Arab war. The lesson is so obvious that I am a little reluctant to cite it, but perhaps in the circumstances repetition is justified.
At the time of the outbreak of hostilities in the Sinai Desert, there were British Armed Forces in the Mediterranean, in Aden, in the Persian Gulf, and in the Indian Ocean. Presumably they were there with the splendid intention of keeping the peace and safeguarding British interests, for example, oil. I have often argued with people about "safeguarding our oil interests". Having spent a little over two years, from 1947 to 1949, in a frigate in the Middle East, largely in the Persian Gulf, ostensibly doing just that, I have been convinced ever since that the only way to defend such interests is by building up good relations with the countries concerned and doing everything possible to improve local standards of living and education, not by scattering sub-strength Navy, Army, and Air Force units around the areas and talking big to cover the gaps.
The near presence of British Forces had no effect whatsoever, neither in keeping the peace, nor in maintaining our oil supplies. War broke out, if anything a little quicker because of the presence of British Forces in neighbouring countries.


I believe, that the Israelis wanted to get going before we felt inclined to join in.

Rear-Admiral Morgan Giles: Does not the hon. Gentleman consider that he is casting a grave reflection on the work of British Forces in the Persian Gulf, and does not he understand that many of these countries who are not in a position to defend themselves value very much the presence of strong friends at hand to give them help when they need it?

Mr. Davidson: I resent strongly the implication that I am casting any aspersions en the functions performed by British Forces. What I am arguing about is the strategy of placing them where they find themselves.

An Hon. Member: Where does the hon. Member find himself?

10.45 p.m.

Mr. Davidson: On the Bill, and if I am given the chance to continue hon. Members will see how the argument is connected with it.
Our oil supplies were turned off and we were helpless to do anything about it. If we had not been involved in the area it is most unlikely that the Arabs would have done that for old time's sake. More than that, we presented the Egyptians with an opportunity to slander us with accusations—

The Chairman: Order. The hon. Member is travelling a long way beyond the scope of the Clause.

Mr. Davidson: I am just about to come back to my main theme. I was going to add that we were wearing knuckledusters, but of course—

The Chairman: Order. The hon. Member must not add anything to what he has said that I have ruled out of order.

Mr. Davidson: In view of your Ruling, Sir Eric, I will omit the next part of what I intended to say.
The Foreign Secretary said that after independence the V-bombers will be stationed on the Island of Masireh, and that these will be available for the six-month period of the naval force, and for as long thereafter as the Government may determine. This in fact implies that they

may be there for a considerable length of time after the date mentioned in Clause 1 of the Bill I am discussing. This is a form of open-ended commitment, whatever the Minister may say, to which we are most strongly opposed. In any case, what could the V-bombers do? Whom are they going to deter? What targets will they hit?
If, after the withdrawal of British ground forces, there is any infringement of the Federation's or Aden's frontier it will not be by smartly dressed troops marching four abreast headed by a percussion band. They will infiltrate by night in small groups dressed in uniforms of the same colour as the barren rocks of Aden, and they will be indistinguishable from the inhabitants of Aden itself. I certainly hope that those bombers will never be used for some sort of strategic function as the Americans are using their bombers against North Vietnam.
As for the presence of naval forces with carrier support for the first critical six months after independence, this is an idea of an entirely different nature. The idea is similar to one I proposed in the debate here on Aden on 20th March this year. In that same speech I stressed the point I made again today, that Aden should be given an opportunity to opt out of the Federation if she so wishes. The carrier idea is an acceptable one, in our view, because it is not an open-ended commitment, because carriers are capable of providing close support, but V-bombers are not, if called upon to do so—and obviously, only if called upon to do so—by the future Government of those territories.
There is another very good reason for the presence of a carrier in the area. They could, if nothing else, serve as a lifeline to any British citizens who might remain behind after the evacuation of our ground forces. I am thinking particularly of carrier-borne helicopters.
In conclusion, I want to ask the Minister one or two questions. Several have been asked already, and I will not repeat them, because many answers have been given during the debate. Would the right hon. Gentleman please give deep and serious consideration to the holding of a referendum in Aden? This is a practical proposal with the aim of alleviating tension and to avoid—

The Chairman: Order. I have said the hon. Member cannot on this Clause debate a referendum.

Mr. Davidson: I am not attempting to debate a referendum. I am attempting to put forward conditions which, in my view, should be carried out before we leave Aden under the Clause on which I am speaking. I cannot distinguish the difference.

The Chairman: If the hon. Member cannot distinguish the difference he must resume his seat. On this Question, he can talk only on whether or not the Clause should stand part of the Bill.

Mr. Davidson: I think that I have made my point, Sir Eric. I ask the Foreign Secretary to reconsider his plan to station V-bombers on the Island of Masirah. I sympathise greatly with the Secretary of State for Defence, because I realise that he has to try to find some use and justification for them.
We have had a considerable discussion on the future destination of the islands referred to in the Clause. I am delighted to hear from the Foreign Secretary tonight that Perim is to be internationalised. But what is to be the destination of the Kuria Muria Islands? Geographically, they appear to belong to the State of Muscat and Oman. It would be interesting to know what the Government's ultimate intentions for them are.
Unless the Minister can reassure us regarding the future of Aden itself, that the inhabitants of the former Crown Colony will be given an opportunity to decide their own political future, either within or without the South Arabian Federation, we on this bench will feel bound to oppose the Government on the Clause.

Mr. Michael Foot: I know that the hour is late and hon. Members, for understandable reasons, are reluctant to continue the debate at such a time, but this is an extremely important matter and we must debate the issues involved at the moment when they are presented to us by the Government. I quite understand that the Government feel that the debate might have been abbreviated earlier, but we must none the less recognise that we have to discuss these matters now, and, therefore, I make no apology for intervening.
The spokesman for the Liberal Party, the hon. Member for Aberdeenshire, West (Mr. James Davidson) takes up a peculiar position when he says that he and his right hon. and hon. Friends intend to vote against the Clause at the end of the debate. I do not intend to vote against it. I shall support the Clause, and I had thought that, whatever may be the variations of opinion among hon. Members, it was now agreed by everyone that we wish at some point to get out of Aden. The Clause provides for just that. It gives the Government power, at a certain time, by Order in Council, to relinquish sovereignty over Aden. I had thought that that was agreed by everyone, whatever disputes we may have about the rest.
If the Liberal Party follows the suggestion which the hon. Gentleman has just made, it will put itself in a peculiar position, because it will be denying to the Government the power to relinquish sovereignty over Aden.

Mr. James Davidson: I said at the beginning of my speech that we are in favour of our vacating Aden. We are not suggesting that the date of evacuation should be postponed. At the end of my speech, I said that, unless we could be given an assurance that the people of Aden itself would be given a chance to decide their own future and opt out of the Federation if they wished, we should feel bound in those circumstances to vote against the Clause.

Mr. Foot: The hon. Gentleman has now repeated a part of his speech. All I am saying is that, if that is what Liberal Members want to say, they should not do it by voting against the Clause. If they say that about the Bill, they could have put down Amendments to say it. [HON. MEMBERS: "We did."] All right. That is perfectly proper. But to vote against the Clause is to vote against the Government's being given power to relinquish sovereignty over Aden, and that, I gather, is not what they wish to achieve.
There are other criticisms I wish to make against the Government, but they could do lead me to wish to vote against the Clause. I hope that the Liberal Party will not vote against it either. It will be most unwise if it does, because it will misrepresent its own position. However, it is not my business to interpret


what hon. and right hon. Members of the Liberal Party have in mind. It is difficult enough for me to try to interpret what is going on in the Government's mind, without taking on that as well.
The hon. Gentleman referred—I shall not pursue it because it would be out of order—to the idea of a referendum. I do not believe that a referendum is a practical propostion, even if we were to debate it. But it should be understood that, although most of us agree in saying that we favour independence being granted to, or being secured by, Aden as soon as possible, the Bill provides, or the Government's policy provides, that that independence shall be granted in circumstances which are, if not unique, at least such as previous Governments, and particularly this Government, have regarded as objectionable. That is, the Bill proposes that independence should be granted to Aden when there have been no free elections there. The Government have properly insisted that independence should never be granted in Rhodesia until majority rule has been established, but the Bill provides that independence shall be granted in certain circumstances to Aden before majority rule has been established.
That is one reason why we are entitled to look all the more carefully at the way in which independence is being granted, and it is why some of us are very critical of the measures the Government put forward in their so-called package proposal a week or so ago. Many of us wish that the Government would take steps, even as this eleventh or twelfth hour or whatever it may be, to try to repair the situation which we believe was created by their action then.

Lord Balniel: Has the hon. Gentleman also noted that under the Bill the Order in Council which relinquishes sovereignty over the territories is not subject to Parliamentary debate? We therefore hope that he will support us later when we request that the Order in Council should be subject to Parliamentary debate, because that is all the more important when there is no democratic constitution in the Colony of Aden.

Mr. Foot: I shall certainly be prepared to examine the proposals about the terms under which it would be proposed that the Order in Council should be debated

in the House, but what I am concerned about at the moment is to try to deal with matters that will arise before that situation occurs. If the damage which has been done partly by the statement of Monday of last week and partly by previous actions—not particularly of this Government but more particularly by their predecessors—is to be repaired in time for independence to go through in terms that we would regard as satisfactory, a series of steps must be taken. These are the matters to which I wish to refer before I agree to the Clause being voted upon.
None of us can genuinely take exception to the general terms of the Clause. I believe that it is essential for the Government to ask, as my hon. Friend the Member for Swindon (Mr. Francis Noel-Baker) rightly stressed, that the United Nations delegation and the Union Nations itself shall be brought back into this operation.
I listened very carefully to everything that my right hon. Friend the Foreign Secretary and other Ministers said. I listened very carefully to my right hon. Friend the Minister of State at the end of our earlier debate when he sought to reassure us on this point. But I have not heard whether the United Nations delegation will return to Aden. I have not heard what arrangements have been made for the delegation to meet the representatives of the Arab nationalist parties. I have not heard in detail what arrangements are to be made.
We had some contradictory assurances or descriptions about the reaction to the proposals made last Monday, and I shall not quarrel about whose testimony may be right. But it appears to me that when they made the statement last Monday the Government were subordinating the United Nations position in a way that they should not have done. We wish to see whether they will now take steps to reassert the position they previously held that the United Nations and its delegation had an essential part to play in trying to secure a new kind of government in Aden. That is what we all want. The main reason for bringing in the United Nations in the first place was that it should be able to mediate between the Government of this country, the Arab nationalist parties and perhaps the other parties concerned, to try to see whether


we could get a different kind of Government there, and to see whether that new kind of Government could provide for a more peaceful transfer than we could otherwise get. This is a matter which is greatly worrying hon. Members on all sides of the House.

11.0 p.m.

Mr. Evelyn King: The hon. Member referred to negotiating with the independence parties. I am sure that that is honourable. Will he accept that F.L.O.S.Y. has said—and never withdrawn the statement—that in no circumstances will it negotiate with Great Britain unless we first acknowledge it as the sole and only representative of Aden politically? If the hon. Member is prepared to accept that there can be negotiations, but if he is not prepared to accept that, we should drop negotiations as they are not practicable.

Mr. Foot: I have heard Tories tell the House and the country that some representatives of nationalist organisations have laid down terms and that it is only on these terms that negotiations can take place. I have heard it time and again, and time and again their claims have been disproved by the facts. There were Cyprus and Ireland. We have known nationalist parties take up strong positions and get into entrenched positions. They have to have regard to their political considerations as well. But, despite these claims, negotiations have subsequently taken place. Despite what the hon. Member said, I am sure that it is not the position of the Government that they do not believe that negotiations cannot take place. It is still the Government's case that they wish to start negotiations despite the claims made by the leaders of F.L.O.S.Y. in certain circumstances. The Government still wish to reopen negotiations and to get a different form of Government in Aden.
We think that we have a proper warning to give to the Government. They have to retreat from some of the things they have said. I do not say that they should do this in a flamboyant manner. I know the methods by which Governments make retreats. I have seen it with previous Governments and with this one. They do not have to announce tonight that they are going to change their policy.

Of course not. But they have to try to take steps to repair the situation.
It would be a good start if the Government were to make it clear, or the Minister of State were to make clear in response to what I am saying and what my hon. Friend the Member for Swindon said earlier, that the Government were working night and day to try to ensure that the United Nations Mission was re-activated.
I come to the second thing the Government should do. I am sorry that the right hon. Member for Streatham (Mr. Sandys) is not here to participate in this extremely important matter, as this was the division between the parties as I understood it to be up to Monday of last week. The right hon. Gentleman and the party opposite were arguing in favour of the maintenance of a defence arrangement with the South Arabian Federation after the date of independence. At one point they claimed that the Government were committed by their negotiations to some form of defence arrangement. But we had an indication from the right hon. Gentleman earlier today that he was retreating from that claim, because he made it clear that the negotiations had never taken place.
It was always the claim of the Government that there was never any commitment. Our feeling on Monday last, and the feeling among many hon. Members on that side, was that the Government had entered into some kind of longer commitment than they previously had. although not an open-ended commitment. But it was still a stronger commitment to the Federation after independence than they had previously made. It was because hon. Members opposite thought that the Government were making a military commitment that they approved the statement, and it was because we thought that they were that we disapproved of it.
This matter should be cleared up, and one of the reasons why it should be cleared up is that, by making a statement so readily approved on that side, the Government have injured their negotiating position. Any proposition about extended support for the Federation which wins the approval of the right hon. Member for Streatham is not likely to win the support of any of the leaders


or representatives of the nationalist parties in Aden.
Therefore, I cannot understand—and I am eager to see the Government extricate themselves from this difficult position with as little bloodshed and disturbance as possible—why the Government found it advisable for their own purposes to make a statement which won the approval of right hon. Members opposite, not merely because the Opposition are so deeply responsible for the troubles we have to overcome but also because the purpose of the Government's policy, as admitted by my right hon. Friend, is to secure a new Government in South Arabia who could carry out the transfer of power in a peaceful manner.
Most of us on this side of the Committee believe that the present Government in South Arabia will not be able to do that because they are not a representative Government. Her Majesty's Government should take steps to limit as much as they can the extra commitment they entered into on Monday last week and make it as clear as possible that that commitment is certainly no commitment by Britain to send back any troops into Aden once they have been withdrawn.
In the interests of British troops, of our reputation in the Arab world, of peace and of our defence budget, I want to see Britain getting out of Aden as soon as possible, but I willingly acknowledge that we should try to get out in circumstances which cause the least bloodshed and in the most peaceful manner.
But what will happen when we get to 9th January if we have our military forces nearby? It will not be so easy for the Government to make a distinction and say, "We can only use our forces if there is an invasion from outside", because there will be subversion and the pressures then from the Opposition to send back British forces to Aden will be very strong.
That is why I want to get this thing clear now. That is why I fear last week's statement. I believe that it made it much more probable that, when the moment comes for independence, this country will find it more and not less difficult to extricate herself. I hope very much that the Government will take these series of measures to try to make it clear, first, that

we want to create a new Government in South Arabia—we have had an underlining of this position already—and, secondly, will try to get the United Nations to assist them in getting that new Government.
My hon. Friend the Member for Swindon indicated that we should not be bound by the present constitutional arrangements we inherited from the Opposition, even in this six-month period. It may be that, if we negotiated, concessions would have to be made in order to make those negotiations successful. But we must seek in Aden a Government which can carry through the transfer intelligibly. That is what I ask the Government to seek by every means.
This is not a reason for voting against the Clause but it is a reason for criticising strongly the measures that were proposed by the Government, or at the least the manner in which they were proposed, in last week's statement. I hope the Government will realise not merely how their proposals were received in the House but how they could be received elsewhere—which is perhaps more important in many respects in the sense that we have to negotiate with other people. I hope that the Government will seek to put the whole matter again in the perspective in which they were striving to put it before the statement, return to the policy they have themselves declared and repudiate utterly the interpretation put on the statement by right hon. and hon. Members opposite.

Mr. Jeremy Thorpe: It is no pleasure to follow the hon. Member for Ebbw Vale (Mr. Michael Foot) in the knowledge that he has put forward good radical arguments and intends at the end of the day to vote like a Tory. He has compromised his own arguments by his voting intention at the end of the day. He has been firing blank cartridges in the air, and I will tell him why. He has said that we want independence for Aden in January, 1968. Indeed, after he had been corrected by my hon. Friend the Member for Aberdeenshire, West (Mr. James Davidson), he conceded that that was the general view of the Committee. Therefore, whether we have independence for Aden in January, 1968, is not the question. The question


is what the political future of Aden will be after 9th January, 1968. Will it be in the Southern Arabian Federation or will it be in some other form? That is the question which we are discussing.
The hon. Gentleman rightly referred to the difficulty of getting a caretaker government going. I should have thought that, to put it at its lowest, it was difficult to get a caretaker Government going between the feudal sheikdoms and the nationalist parties who, the hon. Gentleman has admitted, will not even talk to the British Government. But the whole basis on which the Government are basing their plans for independence is to get a caretaker administration going composed of the Arab nationalists and the sheiks. Many hon. Members seriously believe that this is a practical and realistic possibility. Yet it is on that basis that this country will go into independence and it is on that basis that there is to be a federation.
It is not as though we will have a second chance before independence to see whether this form of coalition will succeed. There will be no consultation with the people of Aden Colony. We know that from the Minister of State. He corrected me. Last week he said that there will be consultation with the people of Perim and Kuria Muria, but there will be no consultation with the people of Aden. So we know that they are not to be asked whether they wish to remain in the Southern Arabian Federation or whether they wish to secede and become part of a Confederation or even become independent as Singapore has in the Malaysian Federation.
It is not even as though Parliament is to have a second say. As the noble Lord the Member for Hertford (Lord Balniel), who rightly took up the point which I raised last week, has pointed out, and the Minister of State has confirmed, the way in which the Order in Council under Clause 1 is drafted is such that we are asked to agree tonight to transfer sovereignty or to relinquish sovereignty without any further Parliamentary control and discussion.
The hon. Member for Ebbw Vale is saying that we are interested in getting out on 9th January, 1968. It will be very difficult to get this caretaker administra-

tion going. We know that there will be no further consultation, we know that Parliament will not have another opportunity of discussing it, but that is of no concern. It is apparently so important that we get out on 9th January, 1968, that we must all vote for this Clause.
It is very much following the precedent set up by the right hon. Member for Llanelly (Mr. James Griffiths) and the Minister without Portfolio when they visited what is now the Central African Federation in September, 1950. So intent were they on the Central African Federation that when in September, 1950, the conference was held in Southern Rhodesia to discuss federation there was not a single African present; but day after day after day from Nyasaland and Northern Rhodesia and Southern Rhodesia there was overwhelming evidence of the massive opposition of the African population to the idea of federation.
It is true that it was a Tory Government that brought in federation. It is true that it was a Tory Government that pulled the trigger, but it was the Labour Government that loaded the gun. That is what the hon. Gentleman is about to give a blank cheque to this Government to do—to push forward with the Federation in the full knowledge, first, that there will be no consultation with the people of Aden; secondly, that there will be no further Parliamentary discussion; and, thirdly, that not only are the African nationalists, or rather the Arabian nationalists—it is all part of the same picture—unwilling to negotiatae and talk with this Government, but that this Government have even sacked, for reasons which remain a matter of controversy, the Chief Minister, Mr. Mackawee, who was chosen to succeed the elected Chief Minister of Aden. It is no good saying that the United Nations may have a part to play. Of course they may. However, this country not only has an obligation to grant independence to people, but it has an obligation to consult their wishes. This is something which a Minister of the Crown has said will not be done, which a Minister of the Crown has confirmed cannot be challenged in the House of Commons. Therefore, merely for the sake of pushing a territory into independence, we are being asked to get rid of it, to wash our hands of it.
11.15 p.m.
I agree that many of the difficulties have been caused by the disastrous policies of the right hon. Member for Streatharn (Mr. Sandys). The world is strewn with broken federations of which he can rightly claim paternity. We are being asked, simply and solely so that we can wash our hands, to say that, whatever the results, without local consultation, without Parliamentary control, we agree to independence on a certain date.
I say that without question within 18 months and probably within six months Aden will secede from the South Arabian Federation in just the same way that Nyasaland and Malawi seceded from the Central African Federation, in just the same way that Singapore seceded from the Malaysian Federation, in just the same way that the Caribbean Federation broke up. I am not saying that the Government should break up the Federation. All I am saying is that they should consult the people who live in the area and not force them into a Federation against their will, because if they do, that Federation will break up not, because of the conscious political act of this country as the protecting Power in a Crown Colony, but after bloodshed and after civil war.
I therefore say to the hon. Member for Ebbw Vale that his arguments were unexceptionable, but his intentions in the Division Lobby tonight are inconsistent with his arguments. Because I believe passionately in the right of the people who live in Aden Colony to be consulted when they have not known democratic processes for many months, because they have lived under martial law, because I believe passionately that it is in their interests to reach a political settlement which will be durable and which will not need to be backed up by V-bombers and British troops with increasing bloodshed, I say that if we give a blank cheque to allow this federation to come into being and simply wash our hands of Aden, not only shall we be stirring up trouble for ourselves in the immediate future, but this will be a disgraceful episode in the history of the imperial administration of this country.

Rear Admiral Morgan Giles: I will not comment on the speech of the hon. Member for Ebbw

Vale (Mr. Michael Foot) except to refer to his remark when he purported to speak for every hon. Member and said that everybody wished to withdraw from Aden. There are at least some of us who would wish to qualify that intention with the proviso that we ought not to withdraw from Aden until Egyptian troops are withdrawn from the Yemen.
A great deal has been said about Aden and about Perim, but I want to refer to the inhabitants of Kuria and Muria some of whom are my friends. The prudent mariner always approaches the Kuria Muria Islands with caution, because the waters around them are completely uncharted and it is a matter of going in with a hand lead line at dead slow speed.
The first action of the inhabitants on the approach of any ship is to round up their women and lock them up—at least, that was what they did when I approached in my ship. Then they come to the beach and wave the Union Jack, as a result of which a whaler goes in from the visiting ship with several bags of sugar and rice, which are very well received by the headmen.
In an earlier debate, it was explained to hon. Members that there are about 80 inhabitants and their wishes should be considered before we pass this Clause. Some may wish to have a United Nations mission visit them to see whether they are prepared to live under some international agency, as the hon. Member for Swindon (Mr. Francis Noel-Baker) suggested. Some might reveal that they had close associations with F.L.O.S.Y. and would wish to have their views taken into consideration, as the hon. Member for Ebbw Vale, no doubt, would wish. Or it may be that they would all—or a number of them—wish to follow the Liberal idea and have a formal referendum in these islands to decide how their future should go.
There might be other—and probably more sensible—ones who would wish to surrender the blessings of British protection at all. I hope that the Minister of State will explain exactly what the Government's views are about formal consultations with the inhabitants of these islands.

Mr. Evelyn King: I had not intended to intervene in the debate, and I do so


largely in compassion for the hon. Member for Ebbw Vale (Mr. Michael Foot) who asked some questions which I really think I can answer.
His first question was why did the Government adopt what seemed to almost the whole House to be a policy very similar to that advocated by us for a long time? That is a reasonable question and it deserves a reasonable answer. The answer is very simple. By the time they reached Monday last they had absolutely no alternative; there was, in fact, nothing else they could do, as I shall shortly try to show.
I was in Aden two months ago, or thereabouts, and I think I report what any hon. Member can verify. Whether one talks to civil servants in South Arabia, Federal Ministers, military people—whoever one talks to—one gets almost exactly the same answer. "We were prepared to carry out," they said, "any policy whatsoever, a policy which was firm, a policy to stay, a policy to go, any policy, but for 18 solid months we have been given by the Government no directive of any sort or kind." That is the reason, or at least a contributory reason, why the choice which existed exists no longer. That was the answer one had from everyone working in that place.
The second point is this. The factor that the hon. Member for Ebbw Vale will not understand is this. Any Government had two choices. They could, if they wished, commit all their support to the Federation. Indeed, those of us who have seen Federal Ministers and who have talked to employees of that Government understand just what an impossible position they have been in over a long period of time.
Members of that Government for many months, and indeed for years, have been conscious that at any moment the British Government may change their mind and disown them, and in that event they would be handed over to their enemies and some of them would suffer imprisonment, or even death.
It is not easy, in such circumstances, to command loyalty. It is not surprising that inside the civil service and indeed the whole administration there has been doubt and frustration because the Federal

Government never knew whether they were going to be supported by those on the benches opposite or handed over to their enemies.
This was where the trouble began. Almost any policy was possible provided that it was followed through with determination, and that is exactly what the Government Front Bench has not done for many months. That is why lives have been lost; that is why loyalties have been shaken; that is why any Government or any party in Aden found ordered government impossible.
The choices left to the Government were two. They could, as they have done, commit themselves finally to the Federation and say, "We will at least defend you from any external aggression from Egypt or the Yemen." That was essential if the Federal Government is to be maintained.
I fully concede to the hon. Member for Ebbw Vale that there was an alternative policy. One could have said, "We will start again; we will desert the Federal Government; we will throw over all the plans we have discussed and enter into serious discussions with F.L.O.S.Y. and the N.L.F. and start again." Does the hon. Member for Ebbw Vale understand that if that policy had been adopted by the Government, we would not have been clear of Aden for five years?
If the hon. Member is prepared to accept that, the argument may change but it is not the slightest good his thinking that the Government can adopt the sort of policy which he proposes—to have prolonged discussions with independence groups, hold referendums and elections, enter into discussions with sheikhs and set up a new Constitution—and do it in six months. To anybody, that is nonsense, and the hon. Member for Ebbw Vale must know in his heart that it is nonsense. If that is his view, he must vote against the Clause.
The Government have chosen probably wisely, granted that they made a new start on Monday of last week. In the light of the situation as it is, they have made the only decision which they could have made, and made it perilously late.
Hon. Members opposite, men of great knowledge and sincerity, have perpetually urged Her Majesty's Government to enter negotiations with F.L.O.S.Y. and with


N.L.F. I had the advantage, in company with an hon. Member on the benches opposite, who would, I think, bear me out, of seeing the leaders of these nationalist movements, as I also saw the Federal Ministers. I will take first the leader of F.L.O.S.Y., Mr. Mackawee. Mr. Mackawee's mind—indeed, the mind of the whole of the party he leads—is such that he will not negotiate with the British Government. No matter how great the eloquence of the hon. Member for Ebbw Vale, he will not do so. If the hon. Member advocates that kind of negotiation with him, he advocates something which is impossible on any basis of coalition.
The leaders of the terrorist movement, of F.L.O.S.Y., have been adamant that unless and until Her Majesty's Government acknowledge this independent terrorist movement as the sole and only representative of the Aden people, they will not enter into any kind of negotiation. Anyone who seeks that kind of negotiation must dismantle utterly the whole federal administration, disband the Federal Army and throw the whole of the Aden problem into the melting pot again.
I hope that hon. Members opposite understand what I say when I say that on Monday last, if the Government seemed to adopt policies which originated on this side, they did so because they had no other choice. They had to nail that flag to the mast of support for federalism or face even greater chaos than already exists.

Mr. George Thomson: It is sufficient for me to say to the hon. Member for Dorset, South (Mr. Evelyn King) that earlier in the debate, when he was not present, I listed the items in the Governments package which were different from the policies which have been put forward by the party opposite. I am confident to rest on that.

Mr. Evelyn King: Mr. Evelyn King rose—

Mr. Thomson: I am sorry, I cannot give way. It is very late.

Mr. King: I was present and I listened carefully.

Mr. Thomson: Two main issues have been raised in this useful debate on the Clause: one about Aden, raised by the hon. Member for Aberdeenshire, West (Mr. James Davidson) and by the Leader

of the Liberal Party, and the other, raised by my hon. Friend the Member for Swindon (Mr. Francis Noel-Baker) and my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot), about the Governments attitude, especially to the rôle of the United Nations in the months ahead. I should like to concentrate on these two issues.
First, Aden. I think that the Leader of the Liberal Party is mistaken in the analogy that he draws between the Central African Federation and the South Arabian Federation, in the sense that although there is much that is uncertain about the state of the South Arabian Federation, as of other Federations of Colonial Territories in other parts of the world, there is this basic difference. In the case of Aden, there is no evidence that any of the political groups in Aden want to separate Aden from the rest of the Federation. That was why I dissented from what the hon. Member for Aberdeenshire, West said right at the beginning.
I have with me, for example, one of many quotations which could be produced from Mr. Mackawee—this one when he was giving evidence in Cairo to the Committee of 24 about a year ago. He said that:
The United Kingdom wished to keep Aden apart from the rest of the Federation. It might be forced to give independence to Aden"—
presumably he means forced by the Leader of the Liberal Party—
… thus splitting the territory into three, whereas the Front"—
that is F.L.O.S.Y.—
considered that South Arabia should be unified".
I assure the Leader of the Liberal Party that whatever else is in doubt, it is not in doubt that all the political groupings in Aden want to see a unified South Arabia, and the issue is not whether Aden should be separate from the rest of the territory; it is how to control the territory as a whole. That is a separate issue.
11.30 p.m.
I am bound to tell the Leader of the Liberal Party that it would be extremely difficult, in the kind circumstances which we have seen particularly vividly in Aden over the last few days, to hold any sort


of referendum during the period immediately ahead, within Aden. I fully concede to my hon. Friend the Member for Ebbw Vale that this act of decolonisation is unique in ways that are unpalatable to all of us, in the sense that it takes place in circumstances when it is not possible to have the full consultation with the peoples of the territories concerned that we would have wished. I ask the Committee to face up to what is the alternative to the policies that we are putting forward.
Here I should like to turn to the speech of my hon. Friend the Member for Swindon. He speaks as the Chairman of the Parliamentary Group of the United Nations Association, and we know his deep attachment to the United Nations. I know that he feels very deeply on this matter. I believe that he is wrong in the criticism that he makes of the policy of Her Majesty's Government. He drew an analogy as false as that drawn by the Leader of the Liberal Party with Central Africa. My hon. Friend drew an analogy with Cyprus and he said that his experience of Cyprus was that there was this basic dilemma, this basic impossibility of, on the one hand, trying to maintain law and order, and on the other simultaneously trying to obtain political reconciliation.
I would merely remind him of two things that are different between Cyprus and South Arabia. The first is that the Cyprus policy, which was finally put back on the rails, owed a great deal to the work of the then Governor of Cyprus, Sir Hugh Foot, who is now the distinguished Minister of State leading the British delegation at the United Nations. The second difference in the case of Cyprus, because many mistakes were made at that time, was the exile of the leader of the Cypriot nation.
Any exile that is taking place in South Arabia is purely voluntary. There is no reason why Mr. Mackawee or Mr. Al-Asnag, or any other leader of the nationalist groups who are at present outside South Arabia should not return tomorrow. There is no legal bar on them, they are not exiled by the British Government, and we have urged them again and again to come back to their own country and join in the work of political reconciliation.
I want to bring to the attention of the Committee, and particularly that of my hon. Friends, the view that Her Majesty's Government continues to take about the rôle of the United Nations. I say at once to my hon. Friend the Member for Ebbw Vale that I can give the three assurances for which he asked. He asked for an assurance that we would continue to work for a more broadly-based, more representative Government. I give him that assurance. Indeed, I tell him that Sir Humphrey Trevelyan, the High Commissioner, only today sent us messages about fresh steps that he is taking to bring this about. My hon. Friend asked whether we continued to seek the help of the United Nations, both the Mission and the Organisation, in reaching that goal. I give him that assurance straight away.
He asked whether we felt bound to the existing Constitution. We feel bound to make progress because of the time factor, but as I sought to explain to the House last week, we are insisting on having put into the present new Constitution proposals for amendment that will make it easy and simply straightforward for any more broadly-based, more representative caretaker Government which emerges, to alter the Constitution to suit what it believes are the needs of the South Arabian people. I hope that I can carry my hon. Friend with me on those three points.
On the general rôle of the United Nations, those who feel deeply, as the Government do, about the contribution which the United Nations can make must face the difficulty in which we find ourselves. It is now almost exactly one year since the British Government took what was the historic decision to accept United Nations co-operation in dealing with the problems of achieving independence. It is nearly six months since the United Nations, with British agreement, decided to set up a visiting Mission. It is now three months since that Mission was set up. Time is passing very quickly, and progress has not been made.
The delays have not been of the British Government's seeking, nor have they been the seeking of the United Nations Mission. Britain has not turned her back on the United Nations at any point. The difficulty has been that F.L.O.S.Y. and the N.L.F. have turned


their backs on the United Nations and refused to deal with it. The United Nations Mission's point of view at the moment—and it is understandable—is that it can do nothing but continue to wait in New York for F.L.O.S.Y. to come to see it At this stage, however, Her Majesty's Government cannot be content to go on waiting. British and Arab lives are being lost in South Arabia, and the defence economies, which are one of the aims of our policy in South Arabia and which command general support from hon. Members on the Government side of the House, are at stake in making progress.
I know that my hon. Friend feels deeply about the situation. I ask him to understand the implications, as I understand his point of view, when he asks us to accept the timetable of the United Nations Mission rather than the timetable which we put forward on behalf of the Government last Monday. My right hon. Friend the Foreign Secretary says that we must aim for independence on 9th January. The United Nations Mission is saying, in effect, that we must wait indefinitely for these nationalist groups to consult with it. It means, in effect, the indefinite postponement of independence, and, whatever the problems of keeping the United Nations participating in this, I am sure that it is not right to pay the price of a postponement of British departure from South Arabia and of independence for South Arabia.
If one follows through the logic of my hon. Friend's position, it means that

we shall have to continue to have a British military presence on some scale in South Arabia for an indefinite period into the future. It means that British soldiers will go on being killed there. That is not an acceptable position.

There is nothing in the proposals which Her Majesty's Government put forward last week which in any way provides an obstacle to continued United Nations co-operation and participation in finding a suitable solution for independence for South Arabia, in helping to create a caretaker Government and, after independence, in helping to supervise the elections which will follow upon independence. There is nothing in these proposals which presents United Nations participation.

I know that my hon. Friend will decide his own course in this matter. I recognise the sincerity of his views. However, I am bound to tell him that I cannot see that the differences between us are of such a fundamental character as to justify him going into the Lobby against the Government tonight. I ask him to consider the assurance which I have sought to give him and others of my hon. Friends. With those words, I hope that the Committee will be able to allow the Clause to stand part of the Bill without a Division.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes, 125: Noes, 8.

Division No. 401.]
AYES
[11.39 p.m.


Allaun, Frank (Salford, E.)
Concannon, J, D.
Galpern, Sir Myer


Allen, Scholefield
Conlan, Bernard
Garrett, W. E.


Anderson, Donald
Crawshaw, Richard
Gregory, Arnold


Archer, Peter
Dalyell, Tam
Grey, Charles (Durham)


Armstrong, Ernest
Davidson, Arthur (Accrington)
Griffiths, David (Rother Valley)


Atkins, Ronald (Preston, N.)
Davies, Dr. Ernest (Stretford)
Hamilton, James (Bothwell)


Bagler, Gordon A. T.
Davies, G. Elfed (Rhondda, E.)
Hannan, William


Beaney, Alan
Dewar, Donald
Harper, Joseph


Bishop, E. S.
Dobson, Ray
Haseldine, Norman


Blackburn, F.
Doig, Peter
Henig, Stanley


Blenkinsop, Arthur
Dunnett, Jack
Horner, John


Booth, Albert
Dunwoody, Dr. John (F'th &amp; C'b'e)
Howarth, Robert (Bolton, E.)


Braddock, Mrs. E. M.
Edwards, William (Merioneth)
Howie, W.


Bray, Dr. Jeremy
Ensor, David
Hoy, James


Brooks, Edwin
Evans, Ioan L. (Birm'h'm, Yardley)
Huckfield, L.


Brown, Rt. Hn. George (Belper)
Faulds, Andrew
Hunter, Adam


Brown, Hugh D. (G'gow, Provan)
Fernyhough, E.
Jackson, Colin (B'h'se &amp; Spenb'gh)


Brown, Bob(N'c'tle-upon-Tyne, W.)
Finch, Harold
Janner, Sir Barnett


Brown, R. W. (Shoreditch &amp; F'bury)
Fitch, Alan (Wigan)
Johnson, James (K'ston-on-Hull, W.)


Buchan, Norman
Fletcher, Ted (Darlington)
Jones, J. Idwal (Wrexham)


Buchanan, Richard (G'gow, Sp'burn)
Foot, Michael (Ebbw Vale)
Lawson, George


Cant, R. B.
Forrester, John
Leadbitter, Ted


Carmichael, Neil
Fowler Gerry
Lewis, Ron (Carlisle)


Coe, Denis
Fraser, Rt. Hn. Tom (Hamilton)
Lomat, Kenneth


Coleman, Donald
Freeson, Reginald
Loughlin, Charles




Lyons, Edward (Bradford, E.)
Morgan, Elystan (Cardiganshire)
Thomson, Rt. Hn. George


McCann, John
Morris, Charles R. (Openshaw)
Tinn, James


MacColl, James
Moyle, Roland
Urwin, T. W.


Macdonald, A. H.
Newens, Stan
Wainwright, Edwin (Dearne Valley)


Mackenzie, Gregor (Rutherglen)
Norwood, Christopher
Wallace, George


Mackie, John
Ogden, Eric
Watkins, David (Consett)


Mackintosh, John P.
O'Malley, Brian
Watkins, Tuder (Brecon &amp; Radnor)


Maclennan, Robert
Oram, Albert E.
Wellbeloved, James


McMillan, Tom (Glasgow, C.)
Oswald, Thomas
Whitlock, William


McNamara, J. Kevin
Owen, Dr. David (Plymouth, S'tn)
Williams, Alan Lee (Hornchurch)


MacPherson, Malcolm
Park, Trevor
Williams, Clifford (Abertillery)


Mahon, Peter (Preston, S.)
Price, William (Rugby)
Wilson, William (Coventry, S.)


Mallalieu, E. L. (Brigg)
Rhodes, Geoffrey
Woodburn, Rt. Hn. A.


Mallalieu, J.P.W.(Huddersfield,E.)
Richard, Ivor
Woof, Robert


Manuel, Archie
Robinson, W. O. J. (Walth'stow, E.)



Millan, Bruce
Silkin, Rt. Hn. John (Deptford)
TELLERS FOR THE AYES:


Miller, Dr. M. S.
Silverman, Julius (Aston)
Mr. Neil McBride and


Mitchell, R. C. (S'th'pton, Test)
Spriggs, Leslie
Mr. Harold Walker.




NOES


Bessell, Peter
Pardoe, John



Davidson, James(Aberdeenshire,W.)
Thorpe, Rt. Hn. Jeremy
TELLERS FOR THE NOES:


Johnston, Russell (Inverness)
Wainwright, Richard (Colne Valley)
Mr. Eric Lubbock and


Noel-Baker, Francs (Swindon)
Winstanley, Dr. M. P.
Mr. David Steel.

Clause ordered to stand part of the Bill.

Clauses 2 and 3 ordered to stand part of the Bill.

Clause 4.—(ADEN WIDOWS' AND ORPHANS' PENSION FUND.)

Question proposed, That the Clause stand part of the Bill.

Mr. Clark Hutchison: I do not wish to detain the House but I have a question to ask. I must declare an interest, in that, should I die, my wife, or widow as she would then be, would receive £199 per year from this Fund. What I want to know is, what provision is being made to deal with inflation and the possible loss in the value of money? I ask not only on behalf of my wife but on behalf of the wives, or widows as they may be, of the many hundreds—indeed, thousands—of British officers who serve or have served in Aden.
This time, may I please have an answer from the Minister? I did not get an answer to my question about the Red Sea lights. I should be very grateful if the Minister would look at this question, and answer it, and the other one I put to him earlier this evening.

Mr. George Thomson: This Fund is being wound up, under the Bill, as part of the proceedings towards independence. It is proposed that the moneys at present held by the Aden Fund will be paid into the Exchequer, and the British Exchequer will be responsible for honouring that obligation under the Fund. I am not sure whether that reassures the

hon. Member about the value of pensions being retained, but the pensions under this Fund will certainly be honoured by the Exchequer, in the same way as other similar pensions are at present.

Mr. Clark Hutchison: I understand that, but I am concerned about inflation and the fall in the value of money. What is to happen to the widows of officers of the Aden Government if money loses its value? Will their pensions be made up to their present value?

Mr. Thomson: I do not wish to engage in a political argument with the hon. Gentleman on a matter such as this which affects many people whose future living conditions are at stake. I think that it would be best if I were to look into the matter properly and write to the hon. Gentleman.

Mr. Robert Cooke: Mr. Robert Cooke (Bristol, West) rose—

Hon. Members: Oh.

Mr. Cooke: My hon. Friend takes this matter more seriously than some hon. Members opposite, who seem more interested in going home to bed. He has a long association with the matters he has raised, and he was quite right to ask the question which he put to the Minister of State. My question to the right hon. Gentleman, which I hope he will consider when he takes the problem away and thinks about it, is this. Would it not be better, instead of passing these funds—as he euphemistically put it—straight to the Exchequer, to guard against future inflation by investing them in


some worth while security so that, as their value appreciates, the people concerned may benefit?

Mr. Thomson: I undertake to write to the hon. Gentleman on that.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 5 ordered to stand part of the Bill.

Clause 6.—(SUPPLEMENTARY PROVISIONS AS TO ORDERS IN COUNCIL.)

Mr. Dodds-Parker: I beg to move Amendment No. 8, in page 4, line 24, to leave out 'section 3 of'.
After the Foreign Secretary's intervention earlier tonight, it is more than ever important to have an adequate explanation of the Government's intentions regarding Orders in Council. Why are only Orders in Council under Clause 3 to be made subject to annulment by Resolution of either House? This question was put on Second Reading by several hon. Members, including the Leader of the Liberal Party, who has now left the Chamber again, and it is more important than ever now to have an answer, after the Foreign Secretary's intervention, in which he described himself as lighthearted, though others less charitably disposed might have used other epithets.
Apparently, Orders in Council under Clause 1(1), which in some ways is the most important provision of all, are not to be laid before the House and be subject to annulment. It is not clear whether the Government here, as in so much they have recently done in Aden, have gone back on what they had hitherto decided, because the appointed day has already been settled, we understand, as 9th January, 1968, although there is as yet, presumably, no Order in Council. Clause 6(1) is very wide and sweeping. All sorts of Orders in Council may be made under it. Under Clause 5, too, Orders in Council will be laid after being made.
As several hon. Members have said, the situation surrounding this Bill is unique. In the considerable number of constitutional advances which the Minister of State and I have seen by now, I

have never known one which appeared to be in such a muddle, with changes of Government policy only a few months before the date of independence. There is no proper Constitution yet. As the hon. Member for Ebbw Vale (Mr. Michael Foot) reminded us, there is no majority rule. The proposals for consultation which the Under-Secretary of State outlined last week are extremely vague. Many hon. Members feel that individual decisions will be needed on Kuria Muria, on Perim, and, for that matter, though it is not in the Bill, on Kamaran. Orders in Council will, I assume, be needed.
It is essential that Parliament be allowed to know what is happening and if necessary to vote against each of these important steps. Will the Minister explain why the Government will not bring all these important Orders before the House? I do not like to accuse him of muzzling the House because, knowing him, I do not think that it is the sort of thing he would do, but the House will be three months or more in Recess between now and the date of independence. On past experience I believe that there is great need to carry the House with the Government on these important issues, and above all to give us an opportunity to comment on each step.
All hon. Members will agree that the Minister of State will try to get sensible action taken on these many outstanding points. All of us have great confidence in him and in his handling of this situation and of the Bill today, until the Foreign Secretary's intervention took us off at a tangent again. Many hon. Members on both sides of the Committee have taken the matter seriously, because we have taken an interest over a great number of years not only in the affairs of Aden but in all that is based on it.
It was important before the Foreign Secretary's intervention, and it is now essential, that the Minister should make it quite clear that on all important steps the House will have the right to discuss the Orders in Council.

Mr. Eldon Griffiths: I want briefly to ask the Minister to clear my mind on the situation we now confront. As I understood the Foreign Secretary, he undertook that he would now seek to achieve for the Island of Perim and international


status. He also agreed that this process might well be difficult and time-consuming, and that perhaps at the end of the year negotiations to achieve this important purpose would still be under way. I also understood him to say that if he felt at that stage that the negotiations were likely to become fruitful he would not allow the arbitrary deadline of 9th January to preclude the negotiations being made a success.
I think that I have stated fairly what the Foreign Secretary undertook, and if that is the case it must follow that, at least in the case of Perim, there is a possibility that the same Order in Council could not suffice to give independence to Aden on that date, while allowing the Government to continue negotiations for a separate destination for the future of Perim.
The hon. Member for Aberdeenshire, West (Mr. James Davidson) asked what was likely to be the ultimate destination of the Kuria Muria Islands. I believe that they will almost certainly be attached to the Aden Federation. But if, as a result of the consultations that may take place or of some slight change of circumstances, the destination were to be different from the likely destination of Aden, the House is entitled to expect a separate Order in Council to deal with that somewhat different matter.
There can be no good reason in fact or in constitutional practice why we should have a single Order in Council, though I admit its convenience to the Government. I accept that it helps to concentrate minds on both sides, but it could well be untidy and difficult for the Government if they had to tie together three "unlikes" in a single Order in Council.

12 m.

Lord Balniel: I appreciate that the Committee is anxious to make progress, but this Amendment is one of substantial constitutional importance.
Its purpose is to ensure that the Order in Council providing for the relinquishment of sovereignty is subject to Parliamentary debate. The Minister of State will remember that during the Second Reading debate he was asked whether all the Orders in Council would be subject to Parliamentary debate. He said that

he was anxious not to mislead the House and that all the Orders would be subject to the scrutiny of the House. I appreciate that this answer was given in good faith, but there is no doubt that it was a mistaken answer. All the Orders are subject to annulment except the most important Order, which is that which gives independence to Aden, Perim and the Kuria Muria Islands.
There are special reasons why the Orders under this Bill should be subject to annulment and further Parliamentary debate. The first reason is this. It is within the recollection of the Committee that we had to take the Second Reading of the Bill immediately after the statement of policy. It was generally recognised that this was not in the best interests of serious discussion of the principles of the Bill. Indeed, this point was made by almost every speaker. The Minister of State, in moving the Second Reading, was not able to refer to the general principles and he confined himself to a detailed explanation of the nationality issues involved.
But there is a more significant reason. We are moving the Colony of Aden to independence in almost unique circumstances. The structure of law in the Colony has broken down and the jury system is not for the moment in operation. There has been a breakdown of public security and the Federal Army has mutinied only in the past week.
Most important of all, this Colony is being taken forward to independence without what has been the invariable practice in the past, except in the case of Palestine, without there being a democratic constitution. Although one hopes that there will be consultation and a prior measure of agreement, it means that the constitution is being imposed on a Colony which does not have a democratic constitution. We cannot be sure that there will be consultation with the people living in Aden. We do not, at this stage, have any knowledge of the reaction of the people of Aden to the constitution recommended, namely the Hone-Bell constitution. As the Foreign Secretary has said, it is impossible to foresee at this stage the constitution which will exist at the time of independence.
In the Amendment we are asking that the House should be given an opportunity of debating the Order in Council. Since


the Foreign Secretary's contribution to the debate, the point which I made earlier about the desirability of separate Orders in Council for the three territories has become overwhelming. It is possible that, as a result of the steps which the Foreign Secretary will be taking at the United Nations, the destiny of Perim will not be association with the Federation, but that it will become the centre of an international peace-keeping force. It is also probable, as a result of what the right hon. Gentleman has said, that the date of independence will be different from the date of independence for Aden.

Mr. George Brown: No. I trust that the hon. Gentleman was not engaged on the trick earlier and that he will not engage on a trick now. The undertaking I gave to the Committee earlier, sincerely, and which the Opposition said they accepted in sincerity, was that I would do everything I could between now and the date of independence. But nothing I said suggested that the date of independence would be changed.

Lord Balniel: I must confess that I find that the tone of the right hon. Gentleman's contributions to these debates has been rather sad. I see no reason why I should be accused, having contributed as constructively as I could, of tricking the right hon. Gentleman. [HON. MEMBERS: "Withdraw."] I do not expect a withdrawal from the right hon. Gentleman. It is merely that the tone he used is quite in contradistinction to the contributions made by every other right hon. and hon. Member who has spoken.
The right hon. Gentleman is entitled to put his interpretation on his own statement. We will see what is recorded in HANSARD tomorrow. But it was my understanding that, if the right hon. Gentleman was engaged in consultation with the United Nations and arrangements were being made whereby the United Nations would accept responsibility for the Island of Perim after the date of independence, he would be prepared to postpone the date of independence—

Mr. George Brown: No. I never said that.

Lord Balniel: —so as to enable the United Nations to implement inter-

nationalisation of the island. As has been pointed out, the period of time at our disposal is only seven months and it is extremely unlikely, however willing the United Nations might be to undertake the responsibility, that it could do so in seven months, and once British sovereignty has been ceded the opportunities of internationalising the island are past.

Mr. George Brown: We have been over all this. I simply want to place it on record—and whether the hon. Gentleman likes my tone or not does not matter—that I never said that we would postpone the date of independence. That is on record and I want to make it plain. I stand by what I said earlier tonight. I will do what I can between now and the date of independence, but I have never suggested that the date of independence would be postponed.

Lord Balniel: Of course I accept the right hon. Gentleman's assurance. We will be able to read the record tomorrow in HANSARD. But it does not detract one iota from my argument that it is desirable that there should be three separate Orders in Council because each of these territories will possibly have a separate destiny.
The right hon. Gentleman has said that he will do his best to secure that the destiny of Perim should be that of an international community run by the United Nations. He said that the destiny of the Colony of Aden is to be a member of the Federation and that the destiny of the Kuria Muria Islands is to depend on consultation with the local population. As these islands lie off the coast of the Sultanate of Muscat and Oman and not off the coast of the Federation, and as their people belong to a totally different ethnic group from those in the Federation, it is at least conceivable, especially as they are not now Members of the Federation, that they will not opt to become members of the Federation.
All we ask in what is surely a very limited and reasonable request, is that, in this unique situation—the last such situation I can think is Palestine—the House of Commons should have the opportunity of debating the Orders in Council and the three separate Orders in Council should be made for the three


separate territories, since the Foreign Secretary's deliberate purpose is to secure a different destiny for Perim from Aden Colony itself.

Mr. George Thomson: I am glad of the opportunity to tell the Committee why there are different procedures attached to the Orders in Council in different parts of the Bill. As the hon. Member for Hertford (Lord Balniel) said, I was asked about this by the leader of the Liberal Party on Second Reading. I undertook to check and I wrote to him personally telling him the result of my check. I had been under a misapprehension about the actual nature of the different Orders in Council, but I can now tell the Committee why they are different.
The Orders in Council under Clause 5 deal with pending appeals to the Court of Appeal. This is legalised and very specialised. There the Orders in Council, as is the normal procedure, are laid before Parliament after making; that is, they are not subject to Parliamentary control, but they are subject to Parliamentary scrutiny.
The Orders in Council under Clause 3, are subject to the normal annulment procedure with which we are familiar. The reason is that the Orders in Council which would come under Clause 3 give power to make modifications on legislation of this House. I should have thought that it was not only entirely appropriate but obligatory that the House should have the opportunity to pray if it wishes against Orders in Council that are modifying our own domestic legislation.
This brings me to the Order in Council under Clause 1, which is the Order relinquishing sovereignty on the appointed day and why this is not subject to the same procedures. Let me first remind the hon. Member that I did undertake that I would look again at the question of whether one should have separate Orders in Council for the three separate territories to give them more flexibility and I will do that before the Bill goes to another place.
The reason for not allowing any annulment or affirmative procedure in respect of the Order in Council under Clause 1 is, first and foremost, that this has been the normal procedure with Independence

Bills on previous occasions. There has not, according to my researches, been any case of any Order in Council under any Independence Act being subject to any Parliamentary control.
In this case, there are some special reasons which reinforce this practice. As the hon. Member for Cheltenham (Mr. Dodds-Parker) said, one is that the House is about to go into the long Summer Recess. If one were to impose the normal procedure for annulment in this case it requires 40 days, and it excludes periods when the House is not sitting for more than four days. We would have very considerable practical difficulties with the Parliamentary timetable in the short period between the resumption of Parliament in October and the Christmas Recess if we were to seek to do this.
We are doing what has been done in other Independence Bills before the House. The House is being told by Her Majesty's Government that we are determined in principle that there shall be independence in South Arabia and that the independence date that we are proposing is the 9th January, 1968. Though there is no date in the Bill, this leaves room for flexibility. The House is being asked to take this decision in principle now.
This is the normal procedure and I think that it would create very great difficulties if one were to attempt to insert a degree of Parliamentary control during the limited period of Parliamentary sittings which will be available to us before the independence date arrives.

Mr. Dodds-Parker: In view of what the Minister of State has said, and his undertaking to my noble Friend that he would look at the matter before it goes to another place, where it can be examined again, I beg to ask to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clauses 7 to 9 ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, without Amendment.

Motion made, and Question proposed, That the Bill be now read the Third time.

12.15 a.m.

Rear Admiral Morgan Giles: A few minutes ago the Minister of State explained to the House the steps which the Government were taking to contact the nationalist groups in Aden and by hook or by crook to bring them to the conference table. At this late hour, I do not wish to discuss the merits or demerits of that, but I should like an assurance that one of the steps which will not be taken in this direction is to limit the action which British forces may take when under fire, and that no sort of restriction will be placed on the weapons which our troops can use when in action.
This evening I have been speaking to a Northumberland Fusilier who has arrived home in the last few hours. He told me, "I had always hoped that if I got myself into a spot of bother, my regiment would come to try to find me I am now beginning to wonder whether, if such a thing occurred, it would be allowed to do so". That is a terrible frame of mind for a magnificent fighting regiment, to which the House should be very grateful for what it has done in Aden, and it is an attitude resulting from the actions of the Government.
May we have a definite reassurance that no such restriction will be imposed, and that if such a restriction exists, it will be withdrawn forthwith?

12.17 a.m.

Sir Douglas Glover: I apologise to the House for intervening at this late hour. I would have much preferred to have made these remarks when the new Clause was discussed, but, as so often happens with hon. Members, I had a previous engagement and was not able to be present when it was discussed. However, I understand that the Government will sympathetically approach the question of putting the Island of Perim into a special United Nations category and under the sovereignty of the United Nations.
As the Chairman of the Anti-Slavery Society, I am, naturally, very interested in this part of Arabia. [Laughter.] Before hon. Members laugh about that, I should tell them that during the last three

years the United Nations has had a report from Dr. Awad, a very distinguished Egyptian, to say that chattel slavery alone accounts for between 1 million and 2 million slaves in the world today. This is, therefore, not a problem with which the House should deal lightly.
The Island of Perim is in an area susceptible to this problem and if it became a centre of United Nations activity, it would be an ideal centre for a United Nations observer force able to do the job which we all want to be done—to eradicate slavery throughout the world. Because it does happen to be in an area where even today, much as we may deplore it, this system does go on. Slave trading—perhaps it is a surprise to some hon. Members—is still a very evil and active operation.
During the past year, when figures were produced, the Port of Suakim, on the Red Sea, had 8,000 people who were turned back on their visit to Arabia because it was thought that if they did get through the port the probability would be that a great many of them would become slaves if they got to Arabia.
This is a very serious problem of which this House ought to be seized. If Perim could become a United Nations outpost for peacekeeping purposes, and have an observation post there to see and find out and research into these activities, it would be a tremenodus step forward in eradicating this very great evil.
I hope that the Minister of State—and I know that he is very much sympathetically with me in my approach to this problem—will use all his endeavours to try to get the United Nations to take over this island, and I hope that I can ask the Foreign Secretary to use all his best endeavours to do this, too.
May I say a final word to the Foreign Secretary. I believe that this is so important that I hope he will not take the attitude he took with my hon. Friend the Member for Berwick-upon-Tweed (Viscount Lambton) tonight.
Perim is really no part of the Federation whose independence we are talking about tonight and, therefore, when there is a prize the world has been seeking for a very long time—to get a United Nations piece of territory which would be of such enormous value in the development of peacekeeping and the development of


social progress by putting down slavery—I hope that the right hon. Gentleman will not be so dogmatic as to say that this has got to happen before 9th January or it is finished forever.
There is a prize here which, 50 years from now, might be the one thing for which the right hon. Gentleman is remembered—that he did ensure the first piece of territory in this world which came directly under U.N. supervision and was a centre where peacekeeping forces could be stationed, and where observation people could be. If this were carried to fruition I believe it would be something in which the right hon. Gentleman could take pride. I hope that he will not be too dogmatic about this and that he will be flexible, because he has an opportunity of doing something here which would be of tremendous value to mankind in removing a lot of evils which we all want to see removed.

12.24 a.m.

Mr. Eldon Griffiths: I should like, at the beginning of the very few words I want to say now, to congratulate the Minister of State for the way in which, against an extremely difficult background in Aden, he has over the months piloted this very difficult Bill through the House of Commons.
I have disagreed on many points with the Government's policy; I still disagree with many of those points. But I do recognise and pay tribute to his patience and his generosity as he has managed the Bill in the House.
I could comment on the Foreign Secretary's interventions, but I think that since we have achieved more of the substance of what we expected this evening, perhaps it would be advisable for me to forgo that temptation.
The two things I do wish to say are that I personally—and I think that many Members in the House and people in the country—feel a sense of tragedy and even shame that a Colony for which we have been and still are responsibile should be passing into independence in bloodshed and chaos. This is not a party matter; this is something which the citizens of this country, with its proud record, will all regret.
I can only say to the Government that, while recognising the need for a final

date to be set, if it should be—as I fear—that on 8th January, during the first weeks of the new year, the streets of Aden are streets of war and there is murder and chaos in the Colony, I hope that no arbitrary date set by the Government will preclude this country from doing its duty to the people of the area and of the world instead of washing our hands and saying, "We go regardless".
I accept the arguments for a date—I understand that arrangements need to be made, whether to remove troops or to confer responsibilities; all that is understood—but if it should be that slaughter is under way in Aden at that time, and no man can say that it is impossible, it would be a moral stain on the history of this country if we were simply to walk past like the Pharisee on the other side of the road. I am sure that the Government are aware of this. I do not press the Minister to say anything about it, because he has a policy to carry out and it would be, perhaps, unwise, but I place that thought before him.
My hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan Giles) spoke of the position of our troops in Aden. The Minister rightly said earlier that some of my questions to him could, perhaps, more properly be directed to the Minister of Defence. I would be happy if he were to say that he will pass to his right hon. Friend the Minister of Defence the points that were raised.
Certainly, however, at a time when some of our men are being killed and perhaps many more of them are being intensely frustrated, we are entitled as the House of Commons tonight to say that we appreciate the problem that many of them face and we admire the restraint with which they are carrying out their duty.

12.27 a.m.

Mr. Biggs-Davison: I shall be very brief. It should not, however, have been necessary that hon. Member after hon. Member addressing the House should have to apologise for taking the time of the House on an important Measure like this. It is not our fault that the Bill is being debated at this late hour. It is a Bill of the greatest importance and it should have been within the bounds of


possibility for the usual channels to have found a better time of day for the Bill to be passed through its remaining stages.
I echo the tribute paid by my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) to the manner in which the Minister of State for Foreign Affairs has conducted the proceedings on the Bill. It is right that the House should give it an unopposed Third Reading. We are all in this House committed to the independence of the South Arabian Federation and we wish its rulers, its leaders and its people well. Like my hon. Friend the Member for Bury St. Edmunds, I salute, as we all salute, our soldiers in Aden and wish fervently that what in, perhaps, not dissimilar circumstances a French leader called the "peace of the parade" could be achieved.
It has been brought out from different points of view, from hon. Members in different parties, that Aden faces a precarious future. My noble Friend the Member for Hertford (Lord Balniel) pointed out, when speaking in Committee, that the remarkable Israeli victory in the third Arab-Israel war may well increase rather than diminish the Egyptian threat from republican Yemen. The Government have been compelled to undertake a very heavy, even open-ended, military commitment to the security of the Federation. This is necessary, but in my view it is cumbersome and costly. Much money could have been saved, perhaps many lives saved, if the Government had followed the policy set out by their predecessors, and agreed to a defence agreement under which Britain would retain a military foothold, able to be reinforced in discharge of that agreement.

Mr. Speaker: Order. We are on Third Reading of the Bill. The hon. Gentleman cannot discuss alternatives to what is in the Bill.

Mr. Biggs-Davison: My last word would be that if the purposes of the Bill are to succeed, and to redound to the credit of the Government and the House, very much will depend upon the strengthening of the Armed Forces of South Arabia. I urge the Government to pay the greatest attention to the military aid mission, announced by the Foreign Secretary, and ensure that it is able to carry out its work with efficiency,

so that the security of the Federation may be achieved.

12.32 a.m.

Lord Balniel: Like my hon. Friend the Member for Chigwell (Mr. Biggs-Davison), I will be brief because the hour is late. Like him, also, I make no apology for discussing the final stages of the Bill, because this Bill is a vehicle which will bring Aden Colony to independence, and so end a British association with this Colony of over 100 years' standing. It is also a Bill which will be the last major act of decolonisation in the history of the British Empire.
Like my hon. Friend, I find it rather regrettable that it has been found necessary by the Government to take the Bill at this late hour. It is right that, from the Opposition benches, I should reiterate what we said on Second Reading, namely, that we welcome the principle of the Bill and that, although there are many question marks which hang over the future of the Federation, we wish it well in whatever the years may unfold.
It is also right that we should make it clear that, while we welcome the principle of the Bill, we only do so in conjunction with the assurance that provision will be made to ensure the security of the Federation against external aggression. To use the phraseology of the Foreign Secretary, this Bill is part of a package deal. The Bill is the constitutional vehicle which will lead Aden towards independence. It has to be read in conjunction with the other parts of the package deal which were referred to by the Foreign Secretary in his speech of 19th June—those parts of that speech in which he outlined the steps which he was taking in the areas of defence, constitutional issues, and internal security.
I would like to refer to the speech of the hon. Member for Ebbw Vale (Mr. Michael Foot). There must be no reinterpretation of the speech of the Foreign Secretary of 19th June, for this reason: the assurances which he gave in that speech were not only assurances given to the House of Commons, or to his own political supporters, or to the Opposition. These were assurances which he has given to the Federal Government. It is absolutely essential that it should be made quite clear that this speech of 19th June is the policy of the Government.


The reason why it should be made so clear is that the Federal Government are not relying on the written word of the Government. We will not enter into any treaty with the independent Federation. They are relying on the word of honour of the British Government.
I want to quote a few words from the speech of the Foreign Secretary on 19th June. He said:
Her Majesty's Government will have no treaty relationship with the new State, but there will be available to it the extensive assistance which we have offered to give in the first few years of independence, including the powerful military and economic support which I have outlined."—[OFFICIAL REPORT, 19th June, 1967; Vol. 748, c. 1142.]
It is on that basis that we accept the Bill for independence in Aden Colony, and it is on that basis that the Federal Government themselves have been prepared to move forward to independence. Ministers must be very careful before they put new glosses or reinterpretations on the speech which has been the basis of the agreement with the Federal Government.
My other comment is that, although the Bill has not been amended, as a result of the debate which took place in Committee, it gives a lead for what could be a novel and exciting step forward for the United Nations. This is the first opportunity in the history of the United Nations of acquiring the trusteeship of a territory situated at one of the most strategically important areas in the entire world, and we hope that this suggestion, which we put forward in all seriousness, will be treated with reciprocal seriousness by the Government and at the United Nations itself.
Finally, I want to echo the congratulations which others of my hon. Friends have extended to the Minister of State. This has not been an easy Bill to handle. He has handled the discussions with a dignity and courtesy which the whole House has appreciated.

12.37 a.m.

Mr. George Thomson: I am grateful for what has just been said and for the patience with which hon. Members have put up with what has been a very long sitting.
At the final stage of the Bill, I want to say simply that the events of the last

week, tragic though they were, have not changed the Government's determination to proceed as announced. Indeed, they have reinforced our belief that the proposals put forward by my right hon. Friend the Foreign Secretary last Monday are wise and right proposals in all the circumstances.
As I have told the House, these events themselves did not have their origin in the proposals which we put forward, but were more the product of the general tensions in the Middle East resulting from the Arab-Israel war and from some of the local circumstances of South Arabia. What the disturbances underline is the need for the Government to have a legislative basis approved by the House of Commons for the introduction of independence.
The other lesson which can be learned from the events of last week and which reinforces the correctness of what we are seeking to do and the timetable which we are seeking to follow is that they have shown how a British presence in Aden is of itself liable to spark off violence in present circumstances in the Middle East. Our policy, therefore, remains one of seeking a peaceful withdrawal of our own forces from South Arabia and of leaving, behind a decent and viable independence.
The House knows that reinforcements have been sent to hold the position in Aden, and perhaps I ought to tell hon. Members that the aircraft which are being used to take these troops out to Aden will be used to bring back Service and civilian families more quickly than otherwise would have been the case.
The hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) expressed anxieties which we heard from a number of quarters in the House earlier in the debate about the conditions under which our Servicemen are having to operate in Aden. I gave a careful reply earlier, and perhaps the hon. and gallant Gentleman will forgive me if I do not elaborate on that "off the cuff", in which I might say something which could cause difficulty to our people out there. I would merely like to tell him that the High Commissioner and the Commander-in-Chief are conscious of these difficulties, and are in complete agreement with each other that they are doing everything they


can to restore normal life in Aden, consistent with the prevention of bloodshed. I know that the House would wish me to join those hon. Members who have already spoken in paying the strongest possible tribute to the courage and restraint of our forces in Aden in what are unusually difficult circumstances, for the very reasons given by the hon. and gallant Gentleman.
I would merely say to the hon. Member for Orrnskirk (Sir D. Glover) that if he had had the good fortune to hear my right hon. Friend the Foreign Secretary speaking earlier in the debate he would have known that my right hon. Friend said that we are actively to explore the possibilities of the internationalisation of Perim. I do not think that anyone can be sure what the result of this exploration wi 11 be, but I think that there is a general desire that we should do everything we can to realise this. The possibilities of a United Nations post there, not only in terms of peacekeeping and maintaining a maritime passage through international waters, but also in terms of the Anti-slavery campaign with which the hon. Gentleman is so closely associated, would be very important if they proved realisable.
I think that the choice which has faced the Government in putting forward this Bill and the policies associated with it has not been an easy one. It is not a choice—I wish it were—between some ideal United Nations solution on the one hand, and some old-fashioned feudalist solution—which is what we are sometimes accused of—on the other. As usual, in real life, and particularly in international affairs, the choice is between incompatible alternatives, and the real choice is between the package proposals which my right hon. Friend put before the House last week, after tremendous consideration, and based on the strongest possible recommendations from men who had been on the spot in Aden and South Arabia, and the kind of chaos and bloodshed which the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) described in one of his more apocalyptic phrases.
I believe that despite all the difficulties and dangers in the months ahead—and I would he the last to underestimate these—and the uncertainties which we face, the Bill, with the timetable which we have proposed, and with the proposals asso-

ciated with it, gives us the best chance of achieving an honourable withdrawal of our forces from South Arabia, and leaving behind an independent Arab State which can take its proper place in the Middle East.

Question put and agreed to.

Bill accordingly read the Third time and passed.

BERMUDA CONSTITUTION BILL

Committee deferred till this day.

Orders of the Day — IRON CASTING INDUSTRY (LEVY)

12.43 a.m.

The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): I beg to move,
That the Iron Casting Industry (Scientific Research Levy) Order 1967, a draft of which was laid before this House on 11th May, be approved.
This Order, to be made under the Industrial Organisation and Development Act 1947, is required to provide funds from within the iron casting industry to finance scientific research to be carried out on behalf of the industry by the British Cast Iron Research Association. The scheme which it outlines is similar to, and will replace, that at present operated by the Iron and Steel Board under Section 13 of the Iron and Steel Act 1953.
The Iron and Steel Board's scheme will end on 1st July, by the Iron and Steel Board (Termination of Levies) Order which was laid before Parliament on 30th March. The funds are to be raised by levies which will be calculated as they were under the Iron and Steel Board scheme.
The Order is acceptable to the bodies with whom it has been fully discussed in accordance with the 1947 Act. In addition, the National Steel Corporation and the British Cast Iron Research Association were also consulted.

12.45 a.m.

Mr. Michael Alison: The Parliamentary Secretary has pointed out that this is really the continuation of


something which has been in existence before, but he will allow us to raise one or two points by way of question and criticism.
I think that I am right in saying that the procedure which this Order replaces has been in existence only since 1966, that the system of levies is comparatively new, and that the British Cast Iron Research Association got its funds earlier by voluntary contributions. It is probably true to say that the new procedure proposed has not really had a very long time to prove itself, and I think there are one or two points which we would like to question about this Order.
The first point I would touch on is the rather broad phrase, the umbrella phrase, "scientific research", for which these funds are to be applied. This gives rise to some misgivings, because if one looks at the Report of the Iron and Steel Board for 1965, in which some description is given of the research work carried on in iron founding, one sees it is not so much a scientific as a technological sort of research, which goes on at plant level rather than in the laboratory. There is a long description in that Report about improved techniques of melting, the use of hot-blast cupolas, electric induction melting, and all the rest.
These are not the sorts of developments which one describes as "scientific research", and the first thing we want to know is: does this Order prescribe that the moneys so raised must be applied to that kind of laboratory backroom work which is purely scientific research, or is it the hon. Gentleman's proposal that these moneys may be applied to the continuation of the sort of technological development which goes on in plants, probably by individual firms not associated directly with the Research Association itself?
I think that it is a valid truism to say that necessity is the mother of invention, and a great many of the best ideas come, not from the laboratory, but from improvisation and development at plant level. Can we have the assurance, therefore, that "scientific research" ensures—probably presupposes—that a lot of this money will be available at the individual plant, and not spent simply on setting up new laboratories and new

buildings remote from the places of work?
I should like to raise a point on the question of finance. The research levy has been going on only since 1966, and one thing we should like to know is: what sort of pool of capital will the Cast Iron Research Association inherit from the old régime, the old parentage under the Iron and Steel Board of yesteryear? Will it set out with something in the "kitty"? Otherwise, it does not look to me as though it will be able to get very far, simply by the levy provision which this Order provides for, because the sums envisaged cannot, as far as I can see, be very substantial. Can the hon. Gentleman, therefore, tell us, is there anything in the "kitty"? And how much does he expect the levy will raise per annum?
I should like to say just a word about the way the levy is to be spread, because this has something to do with the subject of productivity, which is of great importance in our national and economic affairs at present. The interesting thing about the levy is this. If one looks at the description of "leviable worker", in paragraph 1(2) of the Order, one finds that certain categories of worker bear levy and others are excluded. We have foundry workers included, and
persons employed wholly or mainly in the maintenance of premises, plant or machinery
but it excludes certain other categories. such as clerical staff.
One criticism we have in this connection is that there is no proper incentive under the levy system to encourage the substitution of machinery for men. There should be something in the way the levy is spread to make it possible for a firm which increases output with the same number of men, or, perhaps, with a smaller labour force as a result of the introduction of modern plant and machinery, to have some sort of bonus or return.
To some extent, this is provided for in the Order, but it is unfortunate that one can take on as many clerks as one likes in a given foundry firm without incurring levy in respect of them, but, if one substitutes a piece of modern plant or machinery for foundry workers and in consequence one has to take on maintenance men, one has to pay the levy. The rational approach would be to have a slightly higher per capita levy focussed


on a slightly narrower base, namely, the foundry workers.

Mr. Speaker: Order. The hon. Gentleman cannot seek to amend the Order.

Mr. Alison: I take the point, Mr. Speaker. Perhaps the hon. Gentleman will explain the reasoning behind the inclusion and exclusion of certain categories of worker in relation to the question of productivity.
The question of enforcement always gives rise to anxiety on Orders of this kind in which the penalty provisions are often quite sweeping and serious. Article 9 provides for severe penalties, including imprisonment and heavy fines. I fear that the result of the Order will be that iron foundry managements will not run the risk of being fined or sent to prison and, as a consequence, there will be a great proliferation of clerical staff in order to make sure that all the forms and returns are correctly attended to. Curiously enough, as I have said, clerical workers are excluded from levy.
In Article 8, one sees those sinister bureaucratic words:
shall furnish such returns or other information in such form and manner and within such time as may be specified …
It is sad to think that, since 1923, it has been possible for the Research Association to carry on on a basis of voluntary subscriptions to research, and now, for the first time—or, at least, since 1966—the whole panoply of bureaucracy is introduced. I believe that there will he a proliferation of clerical workers unless we have a firm assurance from the hon. Gentleman that there will be no need, as a result of the Order, for iron founding firms to do a lot of extra paper work.
Article 6(5) prescribes that the moneys received by the Minister of Power from the levies must be paid to the British Cast Iron Research Association, being applied to that body exclusively. Under the 1966 scheme, which this one replaces, the levy moneys were paid to the Iron and Steel Board, which in turn made grants and loans to persons or bodies undertaking research in connection with the ineustry and, in particular, to the British Cast Iron Research Association. In other words, there was a wider spectrum of beneficiaries from the levies.
Why is there this narrowing in the Order? Will it be possible for the bene-

ficiaries under the previous scheme to continue to get money if they deserve it? These points have given rise to question and comment on this side of the House.

12.55 a.m.

Mr. Freeson: I understand that there will be no variation in the application of the grant to the industry. It has previously been applied to the Association, and it will continue to be so applied. The only difference is that the Iron and Steel Board will cease to exist, and therefore the allocating of the money must be rearranged.
I was asked for an assurance that the money will continue to be applied not just to laboratory work but more essentially to applied science. I certainly give that general assurance; it will continue to be applied as in the past. I am not aware that there is a sizeable balance, although I would have to check this point. There may be a residual balance from one year to another—I should be surprised if there were not—but I have no figure. I understand that the levies will yield about £200,000 a year, which will enable the Research Association to continue to qualify for the Government grant, which usually comes on a five-year basis through the Ministry of Technology. At present, it amounts to £80,000 a year.
It was urged that the levy should be designed to encourage the use by plants of more equipment than men. This was the issue of productivity. The one amendment to the scheme relates to the definition of leviable worker, which has been amended to make it clear that it includes
… persons employed wholly or mainly in the maintenance of premises, plant or machinery …
for the production of iron castings. Therefore, to that extent there will be a move in the direction the hon. Gentleman suggested.
We have had full consultation with the industry and the various organisations in it, and we do not believe that there is reason to fear that there might be an increase in paper work and clerical staff.
I believe that I have now covered all the points, and I hope that the House will now accept the Order.

Question put and agreed to.

Resolved.
That the Iron Casting Industry (Scientific Research Levy) Order 1967, a draft of which was laid before this House on 11th May, be approved.

Orders of the Day — FACTORY, PELAW-ON-TYNE (COMPLAINTS)

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Charles R. Morris.]

12.59 p.m.

Mr. Bernard Conlan: I am glad to have this opportunity to raise a very important question affecting a substantial number of my constituents.
The matter complained of is a serious nuisance arising from a factory that has been built recently in my constituency in the centre of first-class residential property. The factory belongs to Wailes Dove (Bitumastic) Limited, which is engaged on the bitumenising of large steel pipes which, I understand, are required for North Sea gas. The original planning application was made in the name of Robert Bowran and Co., who have had established for many years a paint factory on a site in this area. The application was made at the beginning of last year and approved by the county planning authority. The factory was duly constructed in June and July, 1966.
I know that there are procedures to be adopted for planning applications and it is necessary for publications to be made in local newspapers. I know that the planning Acts lay down these procedures, but it is not always possible for people who are to be affected by planning applications to be fully aware of the exact consequences if the applications are approved. Indeed, rightly or wrongly, the local people were of the opinion that this construction was a warehouse and an addition to the paint factory that had been there for many years. As things have transpired, we find that it is not an addition but a completely new factory processing an entirely different product.
I understand that the bitumen used in this process is heated to a high temperature, and the process is registered under the Alkali, etc. Works Act. Consequently, the Ministry's staff become involved in supervising the process. I will explain the sort of nuisance of which complaint

is made. The factory has been constructed in the centre of a first-class residential area, and the factory is within 25 yards of some of this property. Frequently, there is smoke, fumes, smells and, worse still, there are droppings. There is fallout of tar which damages the paintwork of the houses, affects the washing hanging out to dry and generally pervades the area. These are conditions in which people should not be expected to live.
I want to say something about the work being conducted by the firm itself. I wrote to the chairman of the company informing him that I intended to raise this question in the House. In fairness to him, I should say that he has been unable to let me have his views because he was abroad on company business. I should also say in fairness to the company that it has gone to a great deal of trouble and expense to install equipment to eliminate the nuisance which has been going on for months and months. In spite of this new equipment, the nuisance remains.
I also pay tribute to the work of the officers of the local authority. The clerk of the council and the chief public health inspector, even though they have no direct responsibility—and it should be made clear that the local council carries no responsibility either for planning or supervision of the processing of the plant—have, on an informal basis, in discussion with the firm, been able to encourage it to install all sorts of gadgets and new equipment to remove the nuisance. But all to no avail. The nuisance persists.
It is clear that, no matter what is done, this nuisance will continue in the area and that a mistake was made in permitting the factory to be built there in the first place. It is true that the site was zoned for industrial purposes many years before the Town and Country Planning Act, 1947, but there is a distinct difference between one type of industrial development and another.
If this had been, as the residents thought, a warehouse, there would have been no objection, because there would have been no nuisance. But, as things have turned out, the processing carried out in the factory is a registered process. So it is clear that the factory should never have been put there. It is wrong that processes of this kind can be carried out within 25 yards of residential property.


If town and country planning means anything, it is that we should segregate offensive industry from residential property. That has not happened in this case.
I think that I have made it clear that a mistake has been made and I do not apportion the blame. The company established its factory having received planning permission. Whether the planning authority fully comprehended the nuisance that might arise from this type of processing, I do not know. But I do know that a large number of my constituents are living in conditions in which this House should not expect them to live.
No matter how much expenditure is made or what new equipment is installed, the nuisance will persist. Therefore, it seems to me that the only solution is to close the factory and transfer the works to one of the two industrial estates in the area—either the Team Valley industrial estate, which would have been admirable for this type of development, or the East Gateshead industrial estate, which could also have easily accommodated it.
The people of my constituency are as entitled as anyone else to live in a clean atmosphere. As long as this factory remains where it is, they will not have the sort of environment or conditions we expect people to live in today. I urge my hon. Friend to take notice of what I have said and to take whatever steps he can to ensure the discontinuance of this foul and intolerable nuisance.

1.10 a.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl): Everything that my hon. Friend the Member for Gateshead, East (Mr. Conlan) has said is correct. No one who has read, as I have, the story of the conditions here and looked at the plan and seen how close the new process is to the houses can believe that there is not a strong case for seeing whether something cannot be done about it.
My hon. Friend paid tribute to the part that has been played by the local authority inspectors and officials in looking into this matter to see what could be done. I think he might also have added the part that has been played by my right hon. Friend's alkali inspectors

who have been most concerned about this.

Mr. Conlan: That was an omission on my part. The Ministry's alkali inspectors have been extremely co-operative and helpful and the work they have done is to be commended.

Mr. MacColl: I thank my hon. Friend for saying that, because it confirms my own impression. They came into this at a late stage when the trouble had been caused and their first report about the conditions implied that they were deplorable. There is now a substantial improvement, because a good deal has been done to improve the situation.
One of the main problems is the coating of the pipes. The fume is now collected and passed through a scrubber with reasonably satisfactory elimination of the fume and prevention of the emission of the droplets. Another source of trouble is the tar boiler in which the coating material is heated before application to the pipes. This is now taken to the scrubber dealing with the fume from the coating and there is further work which is going on which should be completed within the next two weeks.
There is another smell from the pre-coating of the pipes, but this is not likely to cause offence near the houses. There is rust emission coming from the cleaning of the pipes with rotary brushes. This is due to inadequate arrestment plant, but a bag filter unit is to be provided shortly.
Under the Alkali Acts it is a defence if the firm is doing all that it can reasonably do to meet the difficulties. The position is the same under the 1960 Act dealing with prevention of noise. If action is taken under that Act, but the firm is doing all that it can reasonably be expected to do to abate the noise, that is a statutory defence to proceedings.
My hon. Friend is not accurate in saying that the urban district council has no responsibility in the matter. There is a delegation agreement whereby the county council or the planning authority delegates certain responsibilities to the Felling Urban District Council to give planning approvals. In this case, the application form says that this building was to be used for the application of protective covering to steel pipes and fittings. It did not say that it was going to employ this process which is being used,


but it was clear from the application that it was not to be used for storage purposes.
As my hon. Friend said, the difficulty is that the old-established existing use for industrial purposes has been extended to a different type of process which comes under a different class in the Use Classes Order. This is a new planning permission and not merely an extension of the old existing use. A planning approval has been given and is valid. The inspectors think that the firm is doing all it can to follow their advice, and I understand, although it is not a direct responsibility, that the firm is doing what it can to abate some of the noise which the process is causing. I would not challenge my hon. Friend, with his greater local knowledge, when he says that this is an awkward and difficult situation and that what has been done will improve the position, although not solve the problem.
It is for my hon. Friend to advise his constituents, but they might be able to take proceedings in the courts on a private nuisance as opposed to a public nuisance, when the statutory defence of having taken reasonable steps to reduce the cause would not apply. Nobody would want to take legal proceedings even on a civil action without good legal advice, but that is one possible source of remedy.
My hon. Friend also mentioned the possibility of getting the process stopped. It is true that under town and country planning law it is possible to make a discontinuance order for something for which there is planning permission. The initiative should be taken by the planning authority, which would have to make a

discontinuance order not necessarily stopping the use of the building altogether, but stopping its use for this kind of process. I do not want to say whether that would be the right thing to do, because confirmation of that order might come to my right hon. Friend, and I must therefore reserve to him his quasi-judicial position He must not commit himself, for there would probably have to be an inquiry if the order were resisted.
It would involve compensation. What that would be is a matter for speculation, because it would depend on what alternative use there was for the site, but in planning law there is this remedy in this kind of situation. It is for the planning authority to assess whether the harm caused by this use in the situation of this new process so close to these houses is such that it would be prepared to pay compensation to get rid of it. My hon. Friend would be well advised to take it up with the planning authority if, as he says, he wishes to take the matter further.
I conclude by again expressing my sympathy about this situation. I appreciate that those concerned are suffering great inconvenience. Like my hon. Friend, I would not be rash enough to try to apportion blame. We are doing all we can, primarily through the Alkali Inspectorate, to watch the situation, and we are in almost daily touch to see what can be done and to see that there is no deterioration. That is our main function. Both noise and discontinuance are primarily matters for the local authorities.

Question put and agreed to.

Adjourned accordingly at twenty minutes past One o'clock.